The leading fully-integrated timber producer in Malaysia, Jaya Tiasa, is experiencing another year of weak logging due to tightened regulations of limited harvested by Sarawak Forestry Department.
The limitation allows only two coupes to run concurrently annually per licensed area. Before that, Jaya Tiasa was running about four coupes simultaneously in a year per licensed area.
“With Jaya Tiasa’s log production already down 38% year-on-year in six months of FY17 and after inputting the regulatory changes, we have therefore cut log production estimates by 14%-19% in FY17 – FY18 moving forward,” research house RHB reported.
Plywood prices are also expected to decline from US$536 per cubic metre in 2016 to US$480 per cubic metre this year, a drop by 10 percent.
Together with the weak ringgit and the volatility of the foreign exchange market, Jaya Tiasa is expected to hit price cuts in order to ride through production as the bulk of timber producer’s earnings is denominated in US dollar while the majority of its costs are in ringgit, The Star reported.
However, Jaya Tiasa’s plantation sector will still remain bright as its fresh fruit bunch (FFB) production is expected to increase by 19 percent.
Source: The Star