Lower timber earnings due to uncertain market

KUCHING: The state’s export earnings of timber and timber products plummeted by nine per cent to RM4.9 billion in the first nine month of the year compared with RM5.4 billion in the same period last year due to weak and uncertain market.

The export earnings for most major products except sawn timber, MDF (medium-density fibreboard) and veneer have shown a decline of 10 to 20 per cent during the period. Plywood remained the main exported product, accounting for 50 per cent (RM2.4 billion) of the total export earnings followed by log at 28 per cent (RM1.4 billion) and sawn timber RM526 million) (11 per cent).

Sarawak Timber Industry Development Corporation (STIDC), in a statement yesterday, said Japan remained the top importer of Sarawak timber and timber products during the January-September period this year. Export to Japan accounted for 39.2 per cent (RM1.9 billion) of the total export earnings, followed by India (19.7 pct), Taiwan (9.9 pct), Korea (7.9 pct), the Middle East (5.6 pct), the Philippines (4 pct), China (2.5 pct), Thailand (2.5 pct) and Vietnam (2.3 pct).

These markets accounted for 94 per cent of the state’s total exports value of timber and timber products with other countries adding to the remaining six per cent.

“The depreciation of the ringgit against the US dollar has initially assisted exporters to gain extra value for their timber products but this has subsequently subdued as prices of most timber products, especially logs and plywood, declined in recent months. Buyers have also begun to request for reduction in prices or discounts of the timber products as their own local currencies also depreciated against the US dollar coupled with the slowdown in market demand,” STIDC added.

The corporation expected total export earnings to decline below RM7 billion this year in view of the anticipated slowdown in demand and prices of timber products from the traditional markets.

It reported that Sarawak’s export volume of logs registered a decline of 11 per cent, from the 2.3 million cubic metres in January to September 2014, to 2.1 million cubic metres in the same period this year. In term of value, it has declined by 12 per cent from RM1.6 billion to RM1.4 billion.

“The export price of major logs species from Sarawak to India has dropped by about US$40-50 per cubic metre at present, when compared to early this year. FOB (free-on-board) price of Selangan Batu regular logs for India is US$500-520 per cubic metre, Kapur (US$360 per cubic metre) and Meranti (US$180-200 per cubic metre). The depreciation of ringgit against the US dollar in recent months has not been able to push for higher FOB prices for logs,” the statement continued.

Sarawak export of sawn timber has decreased slightly by two per cent from 438,019 cubic metres, in January to September last year, to 430,250 cubic metres in the same period this year. Nevertheless, FOB prices have increased by 34 per cent during the period, registering an increase in export earnings by 32 per cent - from RM399 million to RM527 million.

Plywood is currently experiencing weak demand with lesser orders received from the traditional markets. The price of plywood has decreased by US$5-10 per cubic metre monthly for the past few months, with General Plywood (GP) 11.5mm for export to Japan selling at US$510520 per cubic metre C&F (Cost and Freight).

STIDC also mentioned the high demand for thin plywood of 2.4mm to 5.5mm in the Indian market but buyers are selective, requiring mainly Kapur or Keruing species. The state continues to export small volume of plywood to India.

Overall, the state exported 1.3 million cubic metres of plywood as of September this year, registering a decline by 22 per cent when compared to 1.4 million cubic metres in the same period (January-September) last year. The export value dropped by 15 per cent from RM2.9 billion to RM2.4 billion.