Thursday, March 21

Demand for plywood to go up

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KUCHING: The timber industry here could expect to enjoy an estimated 10 per cent to 15 per cent growth in plywood export this year due to the sudden increase of demand from Japan.

RISE AGAIN: A man uses a pole to mark the site where his house once stood in the ruins of the destroyed residential part of Kesennuma, Japan. Law says increase in demand for timber products, especially plywood, is imminent as Japan begins to rebuild itself. – Reuters photo

Such forecast was made in line with the recent earthquake and resultant tsunami that hit Japan’s northern province of Sendai, where close to 10 timber factories located at Ishinomaki, Ofunato and Miyako city area were devastated.

The reported damages included six plywood mills, one particle board mill and one pulp and paper mill.

When met at his office at Crown Towers here yesterday, Sarawak Timber Association’s (STA) council member Kenny Law said increase in demand was imminent as Japan had to rebuild itself.

“High percentage of volume has been placed through mills throughout the state to ensure sufficient supplies of wood, sawn timber and plywood. The stock exchange revealed in the past week that all timber stocks had gone up. Sarawak-based public listed timber companies all enjoyed a price raise due to the anticipation of increased demand in the timber market,” he disclosed.

Law, who is also KTS Timber Sdn Bhd’s director and marketing manager, stated that Japan had been among the state’s biggest timber products importer, especially plywood. In the past two years, the state’s plywood export to Japan were averaging at 45 per cent from the total.

“ Last year, the state exported a total of 2.75 million cubic metres of plywood – about 46 per cent of it constituted export volumes to Japan. In ringgit terms, plywood exports to Japan were worth RM1.87 billion in 2010 out of total plywood exports’ value of RM3.77 billion.

“The percentage growth of timber export would remain positive this year due to the strong demand from Japan,” he continued.

Discussing the potential revenues to come out from such an outlook, Law explained that it could not be determined as yet due to delivery issues that needed to be sorted out in Japan.

Revealing that ports in Sendai, Kashima, Ishinomaki and Miyako had to be closed at least for six months due to flooding, he highlighted that the respective port authorities had frozen all vessels that were either calling in or planning to transport goods out from the area.

“The nearest available location now would be Yokohama Port at Tokyo bay. However, the port is also facing sea traffic congestion.

The current situation would only delay and affect the quantity of cargo going in,” he added.

Law also mentioned that delivering the products through the numerous available ports in the southern region was not an option due to the expensive logistic cost inland when transporting goods to the earthquake-tsunami hit province. Additionally, the electricity supply shortage also did not help the cause, he pointed out.

“Train services there had narrowed down in order to save on electricity. As such, if we land our export to the south and yet be unable to bring it to the affected area, it would be pointless.”

Notably, Japan produces about 2.5 million cubic metres of soft wood per year with a consumption up to five million cubic metres in terms of volume.

To this, Law commented, “Production capacity is quite big in Japan but in the last few years, they are not producing to full capacity.

The southern part of Japan (Tokyo province), the mills are not affected and should be able to produce at full capacity to cater for the domestic market, if necessary.

“ The current situation is still quite ‘vain’ – whether it would move our market or not. It still depends on log supplies from Japan’s domestic region. On the other hand, demand here in terms of timber base (logs) would be picking up.

“Nevertheless, it is still too early to tell you the exact numbers. Order is an order, but delivery would remain as the main issue. There will be a time frame towards materialisation,” he concluded.