Plywood prices likely to go up, Malaysians firms to gain - Business News | The Star Online

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Plywood prices likely to go up, Malaysians firms to gain


“Supply side is bullish with tight supply of logs in rainy season. The market prices on concrete forming panel and structural panel are moving up and further increase may come if the yen stays weak,” ITTO said in its latest tropical timber market report.

“Supply side is bullish with tight supply of logs in rainy season. The market prices on concrete forming panel and structural panel are moving up and further increase may come if the yen stays weak,” ITTO said in its latest tropical timber market report.

KUCHING: The prices of Malaysian plywood products in the Japanese market are expected to increase if the yen remains weak, according to an International Tropical Timber Organisation (ITTO) report.

Last December, offer prices of 12mm concrete forming panel by Malaysian plywood suppliers were US$450 per cu m C&F (cost and freight) and US$510 to US$520 on 3x6 JAS coated concrete forming panel. The prices were US$10 higher per cu m compared with those of last November.

“The market of imported plywood (in Japan) is changing. Prices are firming on 12mm panel from Malaysia. The importers need to increase the sales prices by higher FOB (free on board) prices by the suppliers and by sudden weakening of the yen.

“Supply side is bullish with tight supply of logs in rainy season. The market prices on concrete forming panel and structural panel are moving up and further increase may come if the yen stays weak,” ITTO said in its latest tropical timber market report. The report is published every two weeks with the aim of improving transparency in the international tropical timber market.

The report said as Japan’s domestic plywood supply was tighter in December compared with November, particularly the thick panels, trading companies were trying to jack up the sale prices of imported plywood. The prices of imported plywood had dropped much in 2016, and future cost is expected to be higher due to the weak yen.

“Knowing that future prices would be higher, some try to secure in the market but nobody has any inventory,” it added.

The report said the Japanese Forestry Agency had projected that the supply of imported plywood for the January-March 2017 quarter would be 5.1% more than a year ago because of the volume contracted in fourth quarter-2016 would come from Malaysia and Indonesia, followed by China and Vietnam. In the second quarter, the forecast is that the supply of imported plywood would by 2% more.

Due to the weak export prices of panel products, especially to Japan, in the past one or two years, Sarawak-based listed timber companies have seen their earnings affected.

According to Ta Ann Holdings Bhd , the lower average selling price in plywood products had affected the group’s profit margin. Japan is the company’s key export market for panel products.

In the first nine months last year, Ta Ann group’s pre-tax profit from its timber products segment fell sharply to RM57.4mil from RM125.7mil in the preceding year corresponding period or down by some 55%.

Another leading timber firm Jaya Tiasa Holdings Bhd had reported a 12% decline in the group’s average selling prices of plywood products in the 12 months to June 30,2016 on a year-on-year basis.

Moreover, Ta Ann has kept its optimism that the plywood market in Japan would pick up and that prices would recover with increasing demand for panel products following accelerated infrastructure construction works ahead of Tokyo Olympics 2020.

Recent media reports stated that the costs for hosting the 2020 Olympics could soar to US$39bil, more than four times from the estimated US$9bil when the Japanese Olympics Committee bid for the event in 2013.

“The state (Sarawak) government’s efforts in promoting our products in Japan has improved market demand and prices,” Ta Ann said when filing its third quarter results with Bursa Malaysia. In the July-September 2016 quarter, the company said its plywood sale volume rose by 10% from the April-June quarter.

On tropical logs, the ITTO report said as production was down in supplying regions of Sarawak and Sabah during the (year-end) rainy season, log prices had stayed high and local plywood mills struggled to secure material logs.

“Sarawak is experiencing heavy rain particularly and the higher water level of river makes towing of logs difficult,” it pointed out.

Most of the timber companies recorded low log production volumes in first quarter of the year due to the long Chinese lunar new year holidays besides the unfavourable weather.

During the period under review, the ITTO report said Sarawak meranti log export prices were US$275-US$278 per cu m CIF (cost,insurance and freight) on regular, US$260 on small and US$245 on super small.

In Papua New Guinea (PNG) and Solomon Islands, ITTO said tropical log productions there were also dropping during the rainy season, and demand was getting low after China slowed down purchase while India was also taking a break in buying. PNG and Solomon Islands are key market competitors of Sarawak’s tropical logs .

Tight log supply was also reported in Indonesia which has resulted in the country’s plywood suppliers proposing higher prices for their products.

According to ITTO, the Timber Supply and Demand Conference of Japan (formed by five groups of imported wood products) had projected a decline in the import of logs and lumber into Japan from major sources this year after registering increases in 2016.

“Housing starts in 2017 are forecast to drop to 940,000 units compared with 970,000 units in 2016. Therefore, the demand for wood would decline in 2017.

“Also the sudden depreciation of the yen would discourage imports,” the report pointed out.

Corporate News , Economy , Markets , Kchtimber

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