KUCHING: Japan, the traditional buyer of Sarawak’s logs, has turned to Papua New Guinea (PNG) to source for supply due to a drastic drop in logs export from the state.
Japan importers have found it increasing difficult to purchase logs from Malaysia after Sabah banned timber export six months ago under the new government
“Plywood mills in Japan wish to buy Sarawak logs but it is a pipe dream because even local plywood mills in Malaysia cannot have enough logs to produce export plywood,” said the Japan Lumber Reports (JLR),a trade journal published every two weeks.
The latest JLR report is reproduced in the International Tropical Timber Organisation (ITTO) tropical timber market report (Dec 1-15 issue).
In the first nine months this year,PNG was the top supplier of logs to Japan, amounting to 48,000 cubic meters (cu m),followed by Sabah (37,000 cu m) and Sarawak (25,000 cu m),according to JLR figures.
Sarawak Timber Industry Development Corporation (STIDC) statistics shown that Sarawak’s logs export volume fell by 28% to 871,000 cu m worth RM429 million in first half 2018 from 1.2 million cu m valued at RM640 million in the same period last year.Sarawak’s top export species are meranti and keruing.
In October this year,the state’s exported logs volume was about 96,000 cu m,out of which about 7,800 cu m went to Japan.
Sarawak logs fetches higher prices when exported than sold in the domestic market.India has been a dominant importer of Sarawak logs.
Sarawak’s logs production volume has declined significantly in recent years due to cut in production quota given to timber companies in line with the state’s sustainable forest management policy and sustained crackdown on illegal logging activities.
The state’s total logs output had dropped from 10.2 million cu m in 2011 to 7.1 million in 2017,according to Sarawak Forest Department statistics.In the first eight months this year,production was about 4.2 million cu m.
Logs export volume has not only been adversely affected by lower harvest output but also cut in export quota to 20% currently from 30%.Sarawak had allowed up to 40% of logs production volume to be exported for many years with the other 60% reserved as raw materials for timber processing mills,like plywood.
According to JLR,imported volume of Sarawak logs by Japanese mills is limited due to the state’s harvest restrictions and increase duty,resulting in more expensive imported logs. The state authorities revised upward the premium for hill timber to RM50 per cu m from 80sen per cu m in July 2017.The premium is chargeable on all species of logs harvested from hill forests and logs of hill species from agriculture conversion areas.
JLR said Japanese plywood mills faced tough choice to import logs from PNG as the main imported species – mersawa – was higher in price than Malaysian logs (mersawa costs 20% to 30% more than meranti regular) and that freight was also higher.
The price of Sarawak meranti regular rose to US$320 per cu m free on board (FOB) from US$300 per cu m after Sabah logs were banned for exports.
Shortage of logs,particularly quality timber,has forced plywood mills to reduce their productions,which subsequently resulted in some of them unable to deliver their products to the buyers on time.
Some suppliers,according to JLR,are lagging behind several months in delivering their contractual orders to the Japanese.Japan is a key importer of Sarawak’s plywood products.
“In the past,plywood mills in producing regions in Malaysia and Indonesia built up logs inventories before arrival of rainy season but this year is different.
“With tight supply of logs even in summer months,mills are not able to build up logs inventories so now offer volume is much less than normal volume,” said JLR.
The report said this development had led to plywood mills in the two countries raising export prices for their panel products with reduced volumes.
Based on the Japan Finance Ministry figures,the country imported an average of 90,000 cu m of plywood from Malaysia in the first five months this year but this fell drastically to about 77,000 cu m in June.
In September,Japan’s plywood imports from Malaysia was 68,600 cu m,down from 86,700 cu m in September 2017. Sarawak accounts for the bulk of Malaysia’s plywood exports.
Last year, Malaysia exported some 1.16 million cu m of plywood worth about RM2.27 billion to Japan or an average of more than 96,780 cu m a month.
