Indonesian log prices drop to $70 per cubic meter

JAKARTA (JP): The price of Indonesian logs dropped sharply to about US$70 per cubic meter in the second half of last year due to sluggish demand in overseas markets, according to the Association of Indonesian Forest Concessionaires.

The association's executive director, Hendro Prastowo, said yesterday the drop in demand for logs had forced Indonesian log producers to cut prices to $70 per cubic meter from the average price of $92 per cubic meter in the first half.

He said the regional monetary crisis, which also affected buyers such as Japan and Korea, had resulted in a decline in the regional property sector.

"The monetary crisis has hit the property sector in Japan, China and Korea. Since most logs and wood products are used by the property business, the demand for logs and wood has also been affected," he said.

He said demand from Japan, the biggest importer of Indonesian logs and wood, had significantly dropped due to a delay in property projects in the country.

Other importing countries, like China and Korea, had also cut their import of Indonesian wood paneling, he said.

He said the falling price of logs in the international market had resulted in a drop in domestic prices.

He said the monetary crisis had also hit the local property sector which resulted in declining demand for logs.

"Even the local wood industry can't take on the currency crisis, even though prices are lower, because demand for wood products has been sluggish," he said.

Minister of Forestry Djamaludin Suryohadikusumo said last week the value of wood and wood-related exports in 1997 was likely to drop by 25 percent to $6.24 million from $8.3 million in 1995 due to lowered demand.

Timber tycoon Mohammad "Bob" Hasan, who is also chairman of the Association of Indonesian Wood Panel Producers, urged Indonesian wood producers to maintain the market despite relaxed demand and the drop in prices of wood products.

"We have to keep exporting our wood to prevent other countries from taking away our market share," he said.

Djamaludin said yesterday that his ministry, in cooperation with the Ministry of Industry and Trade, had set up a coordinating team for the forest products industry to boost Indonesian wood exports.

"The team will comprise the Association of Indonesian Wood Panel Producers, the Association of Indonesian Furniture and Handicraft Producers and other wood-related associations," he said.

He said his ministry was trying to boost the export of sawed timber and furniture, because the industry absorbed a lot of workers. (gis)