Malaysian plywood manufacturers are dealing with weak export demand, softening prices and reduced purchases from their largest trading partner, Japan, who is purchasing more panels from Indonesia, as well as having increased internal production. Malaysia’s largest plywood manufacturers are located in Sarawak and have raised the prices of their products to offset the high production costs brought about by the steep hike in timber premium as well as rehabilitation and development costs, thereby making their products less competitive in the export market. According to Japan Finance Ministry’s data, in the first six months of 2020 (1H20), Japan’s plywood import volume fell by 28% compared to 1H19, with Indonesia and Malaysia accounting for more than 80% of that country’s total plywood imports. Malaysia’s plywood exports to Japan were down to 399,500 cubic metres in 1H20 from 462,200 cubic metres in 1H19 or decline by about 13.5%.
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Double whammy for plywood exporters