PETALING JAYA: Prices of South-East Asian timber products have risen sharply across the board in the aftermath of the severe thunderstorms and flooding in production areas.
In its latest newsletter, the International Tropical Timber Organisation (ITTO) said incessant rainfall and widespread flooding had driven prices of Malaysian timber products sharply higher.
The organisation said the assessment of damage to the Malaysian timber industry was ongoing and that it could take three months to ascertain the extent of the damage.
“With raw material trickling in, stockists of sawn wood and plywood are marking up prices by as much as 25% to 30%. This is an added bonus for the timber business as the Chinese New Year draws near,” ITTO added.
A second wave of flooding last week forced the authorities to evacuate more than 90,000 people from their homes in the southern states. Officials had said the region was experiencing its heaviest rainfall in a century and that the number of people forced to leave their homes was unprecedented.
Johor, a major player in the furniture industry, has been one of the worst affected states. Malacca, Negri Sembilan and Pahang have also been affected. Pahang is a major source of raw logs and sawn timber.
Indonesia was also not spared the floods. The export prices of timber products, especially plywood, have risen sharply amid thunderstorms and law enforcement to prevent illegally harvested timber from reaching various ports in that country.
ITTO said armed military personnel were reportedly stopping trucks in Indonesia for spot checks on several highways leading to major ports.
Meanwhile, Indonesia and the European Union have agreed to start formal talks towards a voluntary partnership agreement to ensure only legal timber enters the region.
Indonesia has proposed a commercial logging moratorium on that country’s critically degraded forests following widespread flooding last month.
The moratorium, which would last between six months and a year, would cover logging in protected areas on slopes with a gradient of more than 40 degrees where large trees have been removed and in forests above human settlements.
The import of tropical logs by Japan surged 33% to 165,800 cu m in September 2006. Japanese imports have been growing since March.
A spokesman from Lingui Developments Bhd said the selling prices of timber products were currently on an uptrend as there was a shortage of logs, given the contraction in supply from Indonesia.
“Strong demand from Japan, China and India is expected to sustain the current price trend. Besides that, the construction boom in the Middle East will also boost the demand for timber products.
“Continued strict enforcement on illegal logging in Indonesia also augurs well for timber product prices,” she added.
A number of research outfits have bullish calls on the sector, pointing out that timber prices would remain high for some time on a sharp reduction in illegal logging in Indonesia and higher demand from Japan.
An analyst said the prices of timber and plywood were expected to increase further owing to the decline in supply due to the clampdown on illegal logging in Indonesia.
“Although this will benefit logging companies in Malaysia, the supply from both countries will continue to decline as unfavourable weather conditions affect log harvest.”
Timber counters rose yesterday as investors betted on firm demand and soaring prices of logs and timber products.
WTK Holdings Bhd gained 35 sen to RM8.05, Ta Ann Holdings Bhd put on 30 sen to RM9.60, Lingui Developments added 3 sen to RM2.06 and Leweko Resources Bhd was unchanged at RM1.76. However, Jaya Tiasa Holdings Bhd lost 2 sen to RM3.66.