Japan halts import of plywood

Warehouses fully stocked up with plywood in preparation for reconstruction work

KUCHING: Japanese plywood importers who aggressively purchased panel products from Sarawak after the devastating earthquake and tsunami in Sendai in March have temporarily halted new orders due to high inventories.

Sarawak Timber Association panel products' committee chairman Wong Kai Song said buying from Japanese companies slowed down in late May as their plywood warehouses were full.

“They are not buying now,” he told StarBiz last week.

These importers have stocked up in preparation for the reconstruction of Sendai, a Pacific coastal town, where thousands of residential homes and commercial buildings were destroyed in the recent disaster.
No more room: The Japanese are not importing plywood from Sarawak now as the warehouses are full.

Statistics from Sarawak Timber Industry Development Corp (STIDC) showed that Japan's plywood imports from Sarawak during the April-June period soared to 499,435 cu m worth more than RM926mil, up from 296,162 cu m valued at RM475.7mil in the January-March period. The import volume shot up by more than 65% in the second quarter.

Wong said the actual demand for timber for Sendai's reconstruction was not as strong as earlier anticipated due to the longer time taken to clear up the huge mess. Rebuilding works had, however, started in June.

“Japan's new housing starts in June increased by about 10% to some 7,200 units compared with the normal monthly figures of between 6,200 and 6,400 units.

“This is a very good set of figures. New housing starts normally peak in October,” added Wong, who is also executive director of Shin Yang group, which owns six plywood mills and is one of Sarawak's largest panel products suppliers.

Wong said global plywood prices were still trading above US$600 per cu m compared with US$400 per cu m in March and April this year.

Describing the current prices as “reasonably good,” he said the plywood market was now in an adjustment period.

“The supply and demand is now balanced. The market will be better towards the end of this year and 2012 will see a stable market,” he predicted.

Wong said with the supply of logs (raw materials) to the plywood mills returning to normal, this had boosted their production to an average of 70% now compared with 40% to 50% early this year when they were hit by an acute log shortage.

There are some 35 plywood mills in Sarawak with a combined installed capacity of about 4 million cu m a year.

On Sarawak's plywood exports to South Korea which had plunged sharply in the second quarter of this year, Wong said it was because of anti-dumping duties imposed on eight plywood suppliers in the state and the availabilty of cheaper panel products from Vietnam and China.

The Korean Trade Commission imposed anti-dumping duties ranging from 5% to 38% on Malaysian plywood exporters from March for three years based on its probe over the complaints from the Korea Wood Panel Association that nine exporters, including one from Sabah, were selling products below their production costs, thereby hurting many South Korean plywood manufacturers.

The STIDC figures revealed that Sarawak's plywood exports to South Korea dropped to 39,143 cu m worth RM55mil during the April-June period, down from more than 125,000 cu m valued at RM137.2mil in the previous corresponding period.

South Korea was previously the second largest buyer of Sarawak plywood.

During the first six months of this year, Sarawak exported nearly 1.3 million cu m of panel products worth nearly RM2.1bil compared with 1.46 million cu m valued at RM1.95bil in the same period last year. Due to better prices, the export earnings were higher in 2011 although a smaller volume was shipped out.

Taiwan was the third biggest importer from Sarawak, absorbing 112,912 cu m worth RM147.5mil, followed by the Philippines, which purchased 34,355 cu m for RM56mil.

Wong said exports to the Middle East had increased, and the main buyers there were Egypt (26,661 cu m worth RM39.9mil) and Yemen (25,361cu m worth RM31.3mil).

He expects stronger demand for plywood when new housing starts in the Middle East after the fasting month.