KUCHING: Local plywood manufacturers have recaptured their market share lost to their closest competitors from Indonesia in the key Japanese market.
In first half-year 2021 (H1 2021), Japan imported 419,600 cubic meters (cu m) of plywood from Malaysia as compared with 336,700 cu m from Indonesia.
This has given Malaysia a clear lead of 82,900 cu m, according to the latest data from Japan Finance Ministry.
Malaysia shipped 61,900 cu m to Japan in June this year, up 19.5% from 52,000 cu m recorded in June last year.
On the other hand, Japan’s plywood import volume from Indonesia fell 8.3% to 56,600 cu m from 61,000 cu m over the same period, according to Japan Lumber Reports (JLR), a bi-monthly trade news on Japan lumber market.
In 2020, Malaysia and Indonesia were tied, each shipping about 702,700 cu m of plywood to Japan. In 2019, Malaysia was the dominant tropical hardwood supplier to Japan, recording 852,300 cu m against Indonesia’s 767,000 cu m.
Vietnam and China were the other smaller suppliers of tropical hardwood to Japan.
The bulk of Malaysian plywood exports to Japan is sourced from Sarawak, of which most of the country’s plywood mills are located.
In the first half of 2021, Japan imported some 370,598 cu m of plywood worth RM767mil (free on board value) from Sarawak.
This accounted for more than 88% of its total imports from Malaysia, according to export figures released by Sarawak Timber Industry Development Corp (STIDC).
Sarawak plywood manufactures had said earlier that their market share in Japan eroded as “they lost their competitive edge to their Indonesian peers.”
This was because they have to raise the export prices of their plywood products to offset the higher production costs following the hefty increase in hill timber premium, rehabilitation and development cess by Sarawak Forestry as well as an increase in minimum wage.
Ta Ann Holdings Bhd, one of Sarawak’s major plywood manufacturers and suppliers, said it has received increasing demand of its plywood last month due to higher overseas construction activities and also, supported by the group’s sustainability certified forest resources.
According to Ta Ann's group managing director and CEO Datuk Wong Kuo Hea, Ta Ann’s PEFC (Programme for Endorsement of Forest Certification) certified plywood products has allowed the group to expand its market share in Japan, which absorbed about 88% of its total plywood exports.
In 2020, Ta Ann registered a 20% increase in its plywood exports from the preceding year.
The inventory of tropical hardwood plywood in Japan is running low due to tight supply from Malaysia and Indonesia.
According to JLR, potential recovery in supply from Malaysia and Indonesia for the second half of 2021 is not likely.
“Producing regions of Malaysia and Indonesia continue to suffer due to the Covid-19 pandemic, which hampers plywood manufacturing and log production due to labour shortage.
“So, recovery of South Sea (tropical) hardwood plywood supply is very unlikely through the year,” it said in its latest market review.
JLR also said the lockdown in Sarawak to contain Covid-19 had affected log harvesting activities, which are typically most active during this time of the year before the raining season sets in.
It noted that logging activities had been hampered by delays in timber permit renewals due to shorter government office hours and labour shortages.
Local plywood mills were struggling to secure logs for their manufacturing activities, added the report.
Due to log shortage and weak export plywood prices, several major plywood mills in Sarawak have significantly scaled down their production volumes in the past one to two years.
JLR said Japan’s imported plywood volume exceeded 200,000 cu m monthly for four consecutive months to June 2021 as compared to less than 200,000 cu m monthly in 2020.