Indonesia overtakes Malaysia as key exporter of plywood to Japan

KUCHING: Indonesia has taken over Malaysia as the top exporter of plywood to Japan, the main export market for both countries.

This June is the first month in recent years which saw the volume of Indonesia’s plywood exports to Japan surpass that of Malaysia’s.

Figures from the Japan Finance Ministry revealed that the country imported 79,000 cu m of plywood from Indonesia against 77,500 cu m from Malaysia in June.

It should also be noted that there was a sharp decline in Japan’s imports of Malaysian plywood in June 2018.

Despite the sharp drop, plywood imported from Malaysia by Japan still saw a 14 per cent surge in June 2018 compared to a year ago.

Also, in the first six months, Malaysia was still leading in plywood exports to Japan as their export volumes were 526,800 cu m and 460,900 cu m respectively.

In 2017, Malaysia exported about 1.16 million cu m (monthly average of 96,783 cu m) worth about RM2.27bil to Japan, which was far ahead of Indonesia’s 783,900 cu m (65,325 cu m).

The ITTO report attributed the decline to falling production as the Sarawak government’s tight enforcement of felling limits for timber/logs.

Sarawak logs production has plummeted in recent years, with plywood mills facing log shortage, particularly quality logs, and have been forced to cut down on output of panel products.

This resulted in some suppliers falling behind for several months in delivering their contractual orders to the Japanese.

Falling harvest volume has also resulted in higher logs cost, major plywood suppliers have been increasing the prices of their products to Japan by about 15 per cent since late last year.

“Malaysian and Indonesian (plywood) suppliers are preparing higher prices before rainy season (normally kicks in fourth quarter of every year) with limited offers for Japan.”

“The (Japanese) importers feel future purchase is difficult with remaining order balances so they buy the minimium necessary volume only,” said the ITTO report, quoting trade news from the Japan Lumber Reports (JLR).

Currently, Malaysia is the second largest plywood exporter to China, with shipment of 19,850 cu m or 25 per cent of the mainland’s total imports in the first half of this year.

China imported 21,100 cu m from Russia, making up 27 per cent of total imports. China imported 15,000 cu m from Indonesia (19 per cent), according to the ITTO figures.

However, China’s plywood imports fell 9 per cent to 79,400 cu m in H1 2018 from H1 2017, imports from Malaysia dropped by 22 per cent.

North America has increased its imports of Malaysian plywood by a quarter year-on-year against a nearly four-fold increase from Vietnam and 84 per cent from Indonesia to offset a 82 per cent drop in imports from China after US imposed anti-dumping and countervailing duties on China plywood recently.

North Amercia’s hardwood flooring imports from Malaysia doubled while imports of Malaysian hardwood moulding increase 24 per cent y-o-y.

Japan’s import of tropical logs climbed by about a third to over 80,000 cu m in 1H-2018 from a year ago, according to JLR.

“Logs from Sabah were 30 per cent more and logs from PNG (Papau New Guinea) doubled.

“Log FOB (free on board) prices temporarily softened in last fall as procured logs at this time arrived all at once early this year.”

With a log export ban imposed by the Sabah government, JLR preditcs future log arrivals to fall sharply.

In May, Sabah Chief Minister Datuk Seri Shafie Apal announced an immediate log export ban so that the raw materials could be directed to local processing mills instead.

Sabah exported between 200,000 to 300,000 tonnes of logs per year to various countries but log harvest volume was reported to be declining due to shrinking supply from natural forests.