Eight major plywood manufacturers in Sarawak like Shinyang, Ta Ann, Samurin and WTK announced to reduce the production by 10-15% starting August until Japan market recovers with owners’ signature.
This is unusual announcement by whole plywood industry, not by individual manufacturer. Imported plywood market in Japan has been depressed since early this year so that ordered volume to the manufacturers have been dropping for quite some time, which puts plywood mills in tough spot.
The largest manufacturer, Shing Yang stopped sales after it reduced the volume by 30% in last April and May but the situation has not improved at all even by this move. Looking at trend of imported plywood, the volume in 2015 was 17.3% less than 2014. Imported volume for the first half of 2016 was 6.5% less than the same period of 2015. Monthly average volume in 2016 is 232,200 cbms as compared to 299,000 cbms in 2014, 20% down. Looking at Malaysian volume, monthly average in 2014 was 121,800 cbms while monthly volume for the first half of 2106 is 93,400 cbms, 23% down.
Cost of supply side has been climbing. 6% commodity and service tax is introduced in Sarawak since last April, minimum wage is increased by 15% since last month, log prices are staying up high. Log production in Sarawak for the first six months of this year is 3,125,700 cbms, only 2% less than the same period of last year but aggressive log purchase by India keeps log prices high even for domestic use.
Export plywood prices on 3x6 JAS concrete forming panel were about $ 450-460 per cbm C&F up until October last year then the prices dropped down to $420 by weak Ringgit. The prices are back up to previous level.
Plywood manufacturers are facing dropping order volume with climbing manufacturing cost but Japan market has very little hope for recovery. The group announcement does not specify any period so they seem to keep production curtailment until the prices recover to satisfying level.