Indonesia overtakes Malaysia as key exporter of plywood to Japan

Downtrend: A plywood factory in Sarawak. The average volume of imports from Malaysia between January and May 2018 was around 90,000 cu m but June imports dropped to just over 77,000 cu m, according to the International Tropical Timber Organisation.

KUCHING: Indonesia has overtaken Malaysia in selling more plywood to Japan, the key export market for both countries.

June 2018 marked the first month in recent years when the volume of plywood imports by Japan from Indonesia exceeded that of Malaysia’s.

Figures from the Japan Finance Ministry showed that the country imported 79,000 cu m of plywood from Indonesia against 77,500 cu m from Malaysia in June.

“There was a sharp decline in Japan’s imports of Malaysian plywood in June 2018.

“The average volume of imports from Malaysia between January and May 2018 was around 90,000 cu m but June imports dropped to just over 77,000 cu m,” according to the latest International Tropical Timber Organisation (ITTO) tropical timber market report.

Despite the sharp drop in imports from Malaysia, Japan registered a 14% jump in its plywood imports in June 2018 compared to a year ago.

However, in the first six months, Malaysia still beat Indonesia in plywood sales to Japan as their export volumes were 526,800 cu m and 460,900 cu m respectively.

In 2017, Malaysia exported about 1.16 million cu m (monthly average of 96,783 cu m) worth about RM2.27bil to Japan, which was far ahead of Indonesia’s 783,900 cu m (65,325 cu m).

The ITTO report attributed the drop to falling production as the Sarawak government was strictly enforcing felling limits for timber/logs.

Due to a drastic drop in Sarawak logs production in recent years, plywood mills are facing log shortage, particularly quality logs, and have been forced to curtail output of panel products.

This resulted in some suppliers lagging behind several months in delivering their contractual orders to the Japanese.

With higher logs cost brought about by declined harvest volume, major plywood suppliers pushed up the prices of their products to Japan by about 15% since late last year.

“Malaysian and Indonesian (plywood) suppliers are preparing higher prices before rainy season (normally kicks in fourth quarter of every year) with limited offers for Japan.

“The (Japanese) importers feel future purchase is difficult with remaining order balances so they buy the minimium necessary volume only,” said the ITTO report, quoting trade news from the Japan Lumber Reports (JLR).

Meanwhile, Malaysia is the second largest plywood exporter to China, with shipment of 19,850 cu m or 25% of the mainland’s total imports in the first half of this year.

China imported 21,100 cu m from Russia (27% of total imports) and 15,000 cu m from Indonesia (19%), according to the ITTO figures.

However, China’s plywood imports fell 9% to 79,400 cu m in H1 2018 from H1 2017, imports from Malaysia dropped by 22%.

Year-on-year, North America raised its imports of Malaysian plywood by a quarter against a nearly four-fold increase from Vietnam and 84% from Indonesia to offset a 82% drop in imports from China after US imposed anti-dumping and countervailing duties on China plywood recently.

North Amercia’s hardwood flooring imports from Malaysia doubled while imports of Malaysian hardwood moulding grew 24% during the same period.

On Japan’s imports of tropical logs, JLR said it climbed by about a third to over 80,000 cu m in 1H-2018 from a year ago.

“Logs from Sabah were 30% more and logs from PNG (Papau New Guinea) doubled.

“Log FOB (free on board) prices temporarily softened in last fall as procured logs at this time arrived all at once early this year.”

With a log export ban imposed by the Sabah government, JLR expects future log arrivals to drop sharply.

In May, Sabah Chief Minister Datuk Seri Shafie Apal announced an immediate log export ban so that the raw materials could be channelled to local processing mills.

Sabah exported between 200,000 to 300,000 tonnes of logs a year to several countries, and the log harvest volume was reported to have fallen due to shrinking supply from natural forests.


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