Plywood exporters stay upbeat

KUCHING: Sarawak’s plywood exporters are upbeat that new market developments will spur higher demand for panel products from key markets Japan and South Korea next year.

Any rising demand is likely to further push up the prices of tropical plywood.

Japan, which will host the 2020 Olympic Games, is set to raise its imports from Sarawak, same as South Korea when its three-year anti-dumping duties on Malaysian plywood ends in February 2014.

Jaya Tiasa Holdings Bhd senior manager (sales and marketing) Woung Lik Chiong said the Japanese market was picking up in view of the Olympics, coupled with the acceleration of reconstruction activities in coastal towns ruined by the devastated earthquake and tsunami three years ago.

“The Japanese business organisations and Japanese trading houses based in Sarawak had a close-door meeting last month to analyse various matters, including the capacity of plywood supply from Sarawak.

“They are preparing to start importing more plywood for the Olympics 2020 project,” he told The Star.

Plywood products are needed for the construction of sports facilities and housing for games athletes.

Woung said reconstruction activities had intensified after a much delay in the Japanese government’s decision on the rebuilding policy for areas affected by the tsunami in March 2011.

The Japanese authorities had said recently that some 300,000 people, who lost their homes in the natural disaster, were still living in temporary housing.

Higher housing starts in Japan are also expected to drive the demand for plywood used for the construction of homes.

According to WTK Holdings Bhd, Japan’s housing starts rose to an annualised 1.04 million units in September, the highest since 2008, beating estimates of 983,000 units.

WTK, which shipped 80% of its plywood exports to Japan in the latest July-September quarter, expects that country’s demand for homes to accelerate in the fourth quarter, given the impending rise in sales tax in April 2014.

WTK said its average selling price of premium plywood products rose by 8.9% from a year ago.

Year-on-year, Jaya Tiasa reported a 12% increase in average selling price of plywood in the July-September quarter. The company has earlier made a strategic move to produce higher value plywood products to maximise profits.

Describing the profit margin for plywood products at current price level as “reasonable”, Woung expects the margin to further improve towards year-end.

He anticipates more orders coming from South Korea once the country’s anti-dumping duties on Malaysian plywood imposed in 2011 ended.

To recap, eight major Sarawak plywood suppliers and a ninth from Sabah were slapped with anti-dumping duties ranging from 5% to 38% for three years until February 2014 for allegedly selling products in South Korea below the production costs.

Jaya Tiasa Timber Products Sdn Bhd and sister company Subur Tiasa Plywood Sdn Bhd, which were among the eight suppliers, were penalised with duties of 6.43% and 5.12% respectively.

The other six Sarawak suppliers are Hwa Seng Veneer and Plywood Industry Sdn Bhd (6.43%), Shin Yang Plywood Sdn Bhd, Forescom Plywood Bhd, Menawan Wood Sdn Bhd, Shin Yang Plywood Bintulu Sdn Bhd and Zedtee Plywood Sdn Bhd (the five companies are owned by the Shin Yang group) (9.75%).

The highest duties of 38.1% was imposed on Sabah-based Sinora Sdn Bhd while it is 8.76% on all other Malaysian plywood supliers.

Woung said the anti-dumping duties had not adversely affected Jaya Tiasa’s plywood export to South Korea, which totalled 48,500 cu m or 27% of the group’s total export in the financial year ended June 30, 2013 (FY2013), up from 23% in FY2012.

“South Korea has always been one of our key export markets for plywood, and we cater for the niche market.

“We always have constant orders from South Korea irrespective of the market trends. As there are more than enough orders to cater for, we have to restrict ourselves to accept only the profitable products in view of our limited production capacity,” said Woung.

He expected the lifting of the anti-dumping duties to boost orders for Sarawak plywood.

Sarawak Timber Industry Development Corporation (STIDC) figures revealed that Sarawak plywood exports to South Korea recovered sharply to 331,457 cu m last year from 239,449 cu m in 2011 when the anti-dumping duties came into force. In 2010, some 512,000 cu m was exported to that country.

On recent media reports that South Korea would impose anti-dumping duties ranging from 2.4% to 27% on plywood from China for three years, Woung said the move would certainly benefit Sarawak plywood suppliers.

“The Korean importers will switch to purchase higher quality plywood products from Sarawak when the price gap between China and Sarawak plywood is narrowed because of the anti-dumping duties on China plywood.”

China was reported to command a 40% market share in Korean plywood market last year as Korean importers turn to the mainland and Vietnam to obtain supply of lower grade plywood products after the anti-dumping duties were imposed on Malaysian plywood.

Woung said Taiwan had traditionally been a prominent buyer of plywood products from Jaya Tiasa and this was expected to be sustained in the next few years.

In the 12 months to June 30, 2013, Taiwan absorbed 28% of Jaya Tiasa group’s total plywood exports.

“Taiwan’s policy to promote economic development, such as construction and residential housing reforms, has helped in promoting the domestic plywood market in processing for housing renovation and interior usage.”

Woung expected Sarawak’s tropical log prices to strengthen further due to tight supply and declining annual state’s production, which has dropped to below 10 million cu m a year from 19 million cu m a year at the peak in early 1990s.

The state government allows up to 40% of the state logs production to be exported, with the other 60% reserved for processing into plywood and other valued-added secondary and tertiary products.

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