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Prices of Sarawak logs surge


“Without Sabah logs, log buyers go to Sarawak,” according to the Japanese Lumber Reports (JLR), a bi-monthly trade journal that provides information on the Japanese timber market, in its latest publication.

“Without Sabah logs, log buyers go to Sarawak,” according to the Japanese Lumber Reports (JLR), a bi-monthly trade journal that provides information on the Japanese timber market, in its latest publication.

KUCHING: Sarawak log prices have surged due to higher demand, thanks to neighbouring Sabah, which banned timber exports since May this year.

“Japan relied on Sabah logs recently.

“Actually, over 10,000 cubic metres (cu m) of Sabah logs were imported in January, February and May, and the total of Sabah logs were 30% more than 2017.

“There have been no logs from Sabah since June.

“Without Sabah logs, log buyers go to Sarawak,” according to the Japanese Lumber Reports (JLR), a bi-monthly trade journal that provides information on the Japanese timber market, in its latest publication.

Japanese buyers also shifted to Papua New Guinea (PNG) as the other key alternative source of tropical timber.

“Meranti regular log prices in Sarawak had been about US$300 per cu m FOB (free on board) but now the prices climbed to US$320 per cu m after Sabah logs became unavailable,” said JLR, its publication of which was reproduced by International Tropical Timber Organisation (ITTO) in its latest issue of tropical timber market report (Oct 1-15).

Meranti is Sarawak’s top export species,which accounted for 58,940 cu m out of the state’s total log export of 2.24 million cu m last year.

The report said the Japanese plywood mills intend to continue buying mersawa species from PNG although the prices are higher than meranti.

“Prices of mersawa from PNG shot up temporarily but levelled off after China (PNG’s main log buyer) slowed down the purchase after general economy peaked off.

“Keruing for lumber is short with very little log supply.

“The buyers in Japan keep buying lumber from South East Asian countries but the supply is unstable.”

Keruing is one of the main log species exported by Sarawak.

According to JLR, imported volume of Sarawak logs is limited due to the state’s harvest restrictions because of environmental reasons and increased duty.

In July 2017, Sarawak raised the premium for hill timber to RM50 per cu m from 80sen in its first review after more than 30 years

The premium is chargeable on all species of logs harvested from hill forests and logs of hill species from agri-conversion areas.

Sarawak has drastically cut log production in recent years in line with its sustainable forest management policy.

State Forest Department’s figures revealed that last year’s log output was 7.11 million cu m, down from 8.67 million cu m in 2016.

In the first eight months this year,production stood at 4.23 million cu m.

At the peaks in the early 1990’s Sarawak recorded log production as high as 19 million cu m a year.

Last year, the state authorities further reduced log export quota to 20% from 30% to enable more logs to be reserved for the local downstream processing mills.

A tighter log supply situation due to reduced annual production from natural forest has kept Sarawak logs prices robust for several years.

Tropical log prices in the international market were pushed up after Myanmar banned logs exports in 2014 to curb smuggling activities and conserve its forest.Myanmar was reported to be the world’s fifth largest tropical log producer (5.59 million cu m in 2012) and exported some 42% of its total production.

According to JLR, Japan importers purchased large volume of Sarawak logs when India slowed down the imports from Sarawak after that country’s raised the goods and services tax (GST) in July last year.

Ahead of the GST, India bought large volume of logs from Sarawak.

As the Japan’s orders from Sarawak were delivered early this year,this pushed the country’s imports of tropical logs by 31.1% to 80,657 cu m in the first six months as compared to the same period in 2017.

“Japanese plywood mills carry ample log inventories now with large arrivals in the first half.

“Log import for the second half (2018) would decrease considerably,” said JLR.

Last month, Japan,Malaysia and Indonesia plywood manufacturers discussed raw material problem,trend of trade and related matters during a plywood conference in Tokyo.

“Japan explained that majority of raw material of plywood is now domestic wood and 52% of plywood supply is domestic but 48% is imports,which is indispensable materials for such items,like floor base and concrete forming panel.

“Domestic manufacturers mainly produce structural panel but they are now trying to produce non-structural products,like floor base and concrete forming panel with softwood.

“But the volume is limited and it is far from replacing imports,” added JLR.

Japan is Sarawak’s key plywood buyers.

The ITTO report said some 3,000 plywood mills in China were closed last year following the country’s massive restructuring efforts to eliminate outdated and polluting wood processing mills.

Besides, 621 fibreboard production lines were dismantled, eliminating over 20 million cu m of production capacity.

Also affected were over 900 particleboard production lines which were either closed or relocated, resulting in a reduction in installed production capacity of 17 million cu m.

 

Corporate News , Timber , Sarawak

   

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