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Plywood prices on uptrend


Going up: Ta Ann expects higher demand for its plywood products.

Going up: Ta Ann expects higher demand for its plywood products.

KUCHING: Japanese companies are paying more for imported tropical plywood products, including those from Malaysia, due to strong demand and falling inventories.

The Japanese market has reported tight supply of south sea (tropical) plywood as shipments of ordered plywood from Malaysia and Indonesia have been largely delayed by log supply shortage in these countries, according to the Japan Lumber Reports (JLR).

“Delay of shipments is about three to four months now, and port inventories are down in Japan while the demand continues to be strong,” revealed International Tropical Timber Organisation (ITTO) report in its latest issue.

According to JLR, even after the rainy season was over, the weather had not improved in producing regions of Malaysia and Indonesia which hampers hauling of harvested logs to coast where the plywood mills are located.

“Plywood mills operate with very little log inventories. Also quality logs are hard to come by now.”

The JLR anticipates delayed shipments from Malaysia and Indonesia would continue as log production regions in these countries would be in rainy season again after late October.

Reduced supply volume and higher export prices will continue.

According to JLR, to produce thin plywood and floor base plywood, log quality is important but the mills are not able to have enough quality logs, which delayed production of ordered volume.

“Because of supply shortage, the export prices (from the plywood manufacturers) are climbing. Indonesian 2.4mm thin plywood (second class/F4 star are US$800-US$820 per cu m C&F (cost and freight),” it added. The JLR did not, however, state the latest export price of similar products from Malaysia.

But according to Ta Ann Holdings Bhd , a leading Malaysian plywood manufacturer and exporter, the prices of its plywood products had gone up by US$25 per cu m in first half-2017.

“With higher demand, we anticipate the price uptrend to continue,” said Sibu-based Ta Ann in a review of the timber market when reporting the company’s results for the first six months.

Quoting figures from the Japan Finance Ministry, the JLR said over the past 12 months (to August 2017), shippers in Malaysia, mainly Sarawak, have provided the largest volume of plywood to Japan, followed closely by Indonesia and China. The trio accounted for most of Japan’s imported plywood.

The figures revealed that in the first eight months, Japan raised its plywood imports from Malaysia to some 780,700 cu m against 717,200 cu m in the corresponding period 2016 or an increase of nearly 9%.

The JLR said with supply shortage of imported plywood, demand of thin plywood had been shifting to other materials, such as medium density fibreboard, adding that the move seems to accelerate.

“Floor base plywood demand has been shifting to domestic softwood plywood.Demand for softwood plywood is brisk mainly by large precutting plants. August softwood plywood production was high at 254,700 cu m, 10.8% more than August last year.

“It is a fact that domestic plywood is now more than imported plywood in Japan but imported plywood is absolutely a necessary product for Japan. But in the coming years, the (Japanese) market would not accept any product without traceability of forest certificate.”

The JLR said in Indonesia and Malaysia, harvest of natural growth timber has been reduced by various restrictions while production of planted timber or tree plantation is increasing.

“In Indonesia, 40% of total harvest is now planted timber and in Sarawak, share of planted timber in total harvest will be more than 50% in five years.”

Sarawak’s log production in first half-2017 was about 3.75 million cu m, out of which 2.94 million cu m were naturally grown timber and 808,000 cu m were planted timber or 21% of total harvest. According to the JLR, Sarawak’s harvest of planted timber would be 1.6 million cu m this year, which is 300,000 cu m more than 2016.

Plywood manufacturers and dealers from Indonesia, Malaysia and Japan recently met in Jarkata to exchange market information and trend of plywood market. The most recent issues are restriction of log harvest and demand structure.

Ta Ann said it had strategically revised its plywood production to process more products with higher plantation and certified wood components “as we are stepping up harvesting of our plantation logs and utilisation of imported PEFC (world largest forest certification organisation) certified eucalyptus veneer (for the production of plywood)”.

Corporate News , plywood

   

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