Entering Q2 of 2021, demand in the furniture industry is still relatively strong. After Q1 price adjustments, the cost-side pressure is expected to gradually be eliminated. The Q2 performance of related listed companies is likely to continue the Q1 trend.

As for listed companies, leading furniture brands have strong bargaining power. Major board members said on the interactive platform that the company has a certain cost transfer capability, and the increase in the price of raw materials will not have a major impact on gross profit. Relevant persons of wooden door manufacturers responded that the cost of raw materials has little impact on Q1 and Q2 performance. Regarding the reporter's pressure on the skyrocketing international timber prices in May, the person said that the company' s solid wood panels are mainly from domestic sources, and foreign countries account for a relatively small proportion and are cheaper.

In contrast, export companies face greater pressure. The outdoor furniture agency replied to investors that the company's order quotation is changed every year, and the current price is determined in the middle of last year, and the new price is expected to be implemented in Q3.

Analyst Yu Xiaowen told reporters that the H1 performance of listed furniture companies is relatively optimistic and is expected to continue the Q1 trend. Looking further apart, custom-made furniture on the raw material side may be in a better position than soft furniture. The main raw materials of the former are various composite plates and hardware, and the price is relatively stable. The raw materials of the latter include sponge and leather. Leather is still at a high level. At the same time, the domestic sales business is more certain than the export business, and the price adjustment cycle of the export business is relatively long and is greatly affected by the shortage of shipping capacity.

On the demand side, residential and export data remain high

It is reported that the judgment of the wood furniture industry mainly depends on domestic housing and export data. Previously, under the low base effect, the two figures achieved substantial growth in Q1 year-on-year. Entering Q2, the low base effect gradually faded, but the two figures remained relatively high.

According to data from the National Bureau of Statistics, from January to May 2021, residential sales area increased by 39.0%. Compared with the performance of doubling year-on-year in the first quarter, the performance is significantly weaker, but in terms of the overall situation, the real estate development prosperity index in May remained at 101.17, which was a relatively high level, which supported the domestic demand for furniture in Q2.

Customs data shows that the growth rate of furniture and parts exports in Q2 has slowed down. The data from April to May show that the export value was 81.2 billion yuan, an increase of 42% year-on-year. The data in Q1 increased by 61%. Previously, the market believed that the boom in the U.S. real estate market had triggered a surge in domestic furniture export orders. At present, this logic is still valid. According to data from the National Association of Home Builders (NAHB), the Q2 US real estate market index remains at a high level above 80, and demand remains strong.

On the cost side, the pressure on the price of wood and sponge is gradually reduced

The demand side continues the Q1 trend, but on the raw material cost side, the impact of price increases is expected to gradually weaken. The prices of main raw materials such as wood, hardware, and sponge have all fallen after May and are at a high level. Taking into account the inventory advantages of leading companies, the impact of cost on gross profit is expected to be weaker than Q2.

Market data showed that the prices of wood and sponges rose in Q2, reaching a staged high in May, and then began to decline. Among them, the international timber futures contract price was lowered to 1,264 U.S. dollars from the historical high of 1,733.50 U.S. dollars in May, gradually stabilizing. Among the main raw materials of sponge, the prices of TDI and MDI have continued to weaken this year, while soft foam polyether has relatively large fluctuations.

Zhuo Chuang Information analyst Wang Chunqing said that the soft foam polyether has experienced a high of 18850 yuan/ton in May, and it has also begun to decline. It is currently stabilizing at around 14,800 yuan/ton.

Although the prices of major raw materials have fallen after May, the impact of some raw materials, such as the rise in timber futures, on the spot market may continue for some time.

On June 27, Hangzhou solid wood custom furniture practitioners showed a price increase letter to reporters, indicating that “due to the extreme shortage of upstream raw materials and unstable factory shipments, it was decided to increase the prices of some products by 5-10 yuan/m from July 1st." According to him, this price adjustment corresponds to a cost increase of about 10%-20%.