KUCHING: WTK Holdings Bhd is consolidating its plywood manufacturing facilities due to the downward pressure on the export prices of the panel products and weak demand in its key Japanese market.
The measure is to optimise the costs structures and preserve cash, said the company.
WTK group, which has plywood manufacturing plants in Kuching and Bintulu, recorded a sharp drop in plywood sales volume by 30,000 cubic m to 81,000 cubic m in 2020 from 111,000 cubic m in 2019 or down by 27%.
About 70% of the group’s plywood products were exported to Japan and 29% to Taiwan last year.
WTK said its plywood products have continued to face competition from Japanese domestic plywood supply as well as imported plywood from Indonesia into the Japanese market.“This was coupled with the construction and house-building sectors in Japan are slowing down, and with bearish future, the buyers are limiting the purchase volume.
“Consequently, plywood imported into the Japanese market is experiencing downward pressure on the selling price and sales volume, ” WTK added in its 2020 annual report.
According to Japan Lumber Report, tropical plywood supply in Japan is expected to drop after the country’s largest manufacturer Daishin Plywood Industry Co ceased operations and went into liquidation in March 2021.Daishin had been importing tropical plywood and processed into plywood for walls and other applications.
On the group’s logging business, WTK said it would continue to implement the production curtailment programme if the demand for timber products remain weak.
“The outlook for lthe ogs business remains challenging as the purchasers who are mainly the domestic and foreign wood-based industries are scaling down their operations in view of the depressed market conditions and erosion of profit margin for timber products.”In 2020, the group’s log production plunged to 144,000 cubic m from 488,000 cubic m in 2019 while logs sales fell by 310,000 cubic m from 428,000 cubic m year-on-year.
The export volume of logs declined to 7,000 cubic m from 50,000 cubic m year-on-year, and the entire export volume went to buyers in India.