KUCHING: Sarawak has raised the log export quota to 50% from 40%.
The upward revision in the quota, which took effect sometime in the second half of last year, was based on the requests of timber companies, according to Sarawak Timber Association (STA) general manager Dr Peter Kho.
For many years, the state government only allowed up to 40% of the state’s total log production volume to be exported, with the other 60% reserved as raw materials for the downstream industries to be processed into value-added timber products, like plywood.
Noting that association member timber companies have not been informed by the state authorities on how long would the new log export quota be maintained, Dr Kho believed that any review would only be carried out when necessary.
“Sarawak log productions have declined over the years, and last year’s volume is expected to be lower than 2012,” he added when asked by The Star on Tuesday. The 2013 data has yet to be released.
Logs output fell to 9.46 million cu m in 2012, the lowest level since the 1980s, down from 9.61 million cu m in 2011. At the peak in 1991, official figures shown that Sarawak harvested more than 19 million cu m of logs before annual production was cut on a gradual basis to around 12 million cu m in the last decade.
Four public-listed timber companies — Jaya Tiasa Holdings Bhd, Subur Tiasa Holdings Bhd, WTK Holdings Bhd and Ta Ann Holdings Bhd — had all reported lower log outputs last year over 2012, ranging from single to double digit decline.
Sarawak Timber Industry Development Corporation (STIDC) statistics revealed that Sarawak exported 3.3 million cu m of logs in 2012, which was nearly 7% higher than 3.09 million cu m in 2011. India was Sarawak’s main log buyer, absorbing some 64% of the state total exports in 2012.
According to industry sources, timber companies preferred to export logs due to the favourable prices because of the tight supply coupled with strong demand for Sarawak’s tropical logs by foreign buyers.
Due to the strong export prices, some local processing mills were said unwilling to pay for the logs based on market prices. Moreover, it was reported that demand for some of the state’s timber products had slowed.
Meanwhile, CIMB Research expects the supply of tropical logs in the export market to remain tight this year despite an anticipated recovery in Sarawak’s log production.
“Myanmar, which accounted for 16% of global tropical log exports in 2011, will ban the export of unprocessed logs from April-2014 onwards to curb illegal logging in the country.
“Our channel checks reveal that some of the buyers may import logs of the less-common species from Sarawak once Myanmar’s log export ban takes effect this year. This will boost the demand for Sarawak’s logs, which would in turn support log prices,” the research house said in a report on the timber sector.
“On the other hand, demand for tropical logs should also improve in 2014 given the better outlook for the global economy. IMF has projected that the world’s GDP growth will rise to 3.7% in 2014 from 3.0% in 2013.”
“Demand for timber will benefit from a stronger global economy as it is one of the key basic materials.”
CIMB Research expects log demand from India to remain robust this year, with demand largely driven by the country’s construction activities.
The research house said the tight supply and positive global demand outlook were expected to support log prices, with the average price for meranti regular (the benchmark price for Sarawak export logs) of around US$280 cu m this year.
According to the Japan Lumber Report, meranti regular was traded at around US$255 per cu m in January last year, rose to US$305-US$310 per cu m in June and retreated to US$280 per cu m in August.
It anticipates Sarawak log production to improve this year on assumption that the weather would normalise as the state log output last year was affected by poor weather which hampered logging activities.