KUCHING: Sarawak’s log prices are softening with improved production output.But the prices of higher grade logs which Japan wants have very little influence (little price change), according to the Japan Lumber Reports (JLR) latest issue (Aug 16 to 31).The improved log production is resulted from stepped up logging activities due to the dry weather in recent months that has facilitated timber harvesting. During the April-June 2019 quarter (2Q2019) major timber companies, like Jaya Tiasa Holdings Bhd, had in fact reported reduced logs output. Due to lower logs output, Jaya Tiasa’ said its log sales had fallen by 45 percent in 2Q2019 from 2Q2018.

WTK Holdings Bhd, on the other hand, said its log production had also declined and that the dry weather had affected the river transportation of logs from log ponds. According to JLR, arrivals of tropical logs in Japan from Papua New Guinea (PNG) are steady. “Log production in PNG is dropping due to rainy season but plywood mills in Japan carry ample log inventories. So, there is no fear of supply shortage. “Log demand by China and India is not so active, so the suppliers (in PNG) are not able to push the log export prices up,” it added. The JLR report is reproduced by International Tropical Timber Organisation (ITTO) Tropical Timber Market Report.

Japan shifted to PNG to source for log supply after Sabah banned log export more than a year ago while Sarawak cut log export quota due to decreased log productions. On Japan’s plywood supply in the month of June-2019,JLR said it was down by 7.4 percent to 476,200 cubic meters (cu m) from a year ago but was 5.3 percent more than preceding month of May. Supply of imported plywood, mainly from Malaysia, Indonesia and China, fell by 18.2 percent to 189,000 cu m as compared to June-2018. But the production of softwood plywood rose by 1.6 percent to 276,300 cu m during the same period.

In imported plywood, Malaysia supplied 61,000 cu m in June, which was down by 23.5 percent from a year ago. “This is the lowest in the last five years,” said JLR.
Indonesia supplied 70,700 cum, which was lower by 17.4 percent compared to June 2018 but 22.8 percent more from May-2019. China supplied 43,000 cu m, a reduction of 7.7 percent during the same period.

“Because of sluggish market in Japan, the importers have not placed much orders to the supply side,so future arrivals seem to continue low.  “There are two different pictures between domestic plywood and imported plywood. Domestic softwood plywood shipments continue very active and the manufacturers continue a full production with low level inventories.  “Domestic supply renewed record high after two new plywood mills started in late May and the production by these mills added on in June. The shipment of softwood plywood was 270,200 cu m,8.2 percent more (compared to June 2018).   “Meantime, movement of imported plywood market continues slow and high export prices and lower market prices in Japan continue,” added JLR.
The report said in Tokyo region, condoninium starts slowed down and many redeveloping properties are in the stage of interior finishing, and development of new properties would be next year, so the demand for imported plywood is slow.

“Meantime, in Kyushu and Nagoya regions,condo starts are busy,so there is ample demand for concrete forming panels but desired prices by the contractors are severe. “By stagnating movement of imported plywood in Tokyo market, the market prices continue depressed while the suppliers’ export prices remain high. “There is some short items in the inventories,so the dealers wish to place orders but price gap between the suppliers and market in Japan is too much, so they are not able to place new orders.” JLR said actually, Japan’s new orders dropped considerably since late last year, so arrivals of imported plywood in May and June were less than 200,000 cu m, which were record low for two straight months.