Indonesia's plywood exports to Japan up 11%

Indonesia's plywood exports to Japan up 11%

JAKARTA (JP): Indonesia's plywood exports to Japan saw an 11
percent increase in the first nine months of this year and are
expected to continue rising until next year, an international
researcher says.

The research division of international investment bank Merrill
Lynch predicted over the weekend that plywood demand from Japan
-- Indonesia's major export market -- is likely to go up by about
8 percent this year to support the development of 1.6 million new
houses there.

Apart from that, Merrill Lynch said, Indonesia's plywood
industry -- as well as Malaysia's -- has also gained an advantage
from the closing down of several plywood companies in Japan and
South Korea and from the limited restrictions of log exports in
Papua New Guinea and Malaysia.

"Restrictions on log exports in Papua New Guinea and Malaysia
helped boost Indonesia's plywood production by up to 30 percent
in the January-May period," Merrill Lynch noted, as quoted by
Antara.

As a result, Malaysia's and Indonesia's plywood exports to
Japan during that period increased by 14 percent and 8 percent,
respectively, compared to the corresponding period of last year.

The research agency also attributed the favorable plywood
prices to the expected resurgence of Japan's construction sector
next year. The sector mainly applies concrete panels.

Merrill Lynch estimated that although plywood demand from 50
major construction firms in Japan would only grow by 1.2 percent
until the end of the current fiscal year in March 1997, the
growth may increase to 7.5 percent in 1997/1998 fiscal year with
increasing demand from both the government and private sectors.

China

Merrill Lynch contended that plywood demand in China would
also increase. By the second half of 1997, the company said China
would reestablish itself as a large plywood consumer.

Currently, however, plywood demand from that country is still
weak due to Beijing's tight fiscal policy and large carry-over
stocks. As a result, plywood prices in China fell to a low of
US$380 per cubic meter recently.

However, the research agency was confident that demand from
China would gradually recover as Beijing announced in August the
lowering of credit and deposit interest rates by 1.2 and 1.5
percentage points, respectively.

The interest rate declines would reinvigorate plywood
consumption in China, especially demands from the private sector,
Merrill Lynch said.

Another factor which is expected to spur China's demand for
Indonesian plywood is the shifting of Malaysia's plywood exports
from China to Japan.

A routine meeting of executives of the Association of
Indonesian Wood Panel Producers (Apkindo) and the Malaysian Panel
Products Manufacturers in the near future will discuss floor
prices for plywood exports to China and South Korea.

The floor prices are currently set at $560 per cubic meter in
China and $525 per cubic meter in South Korea.

Earlier this year, Apkindo said that during the first four
months of this year, prices of Indonesian plywood averaged $496
per cubic meter, higher than the $426 in the same period of last
year.

The improved prices were recorded in almost all of Indonesia's
13 major plywood markets, which include the United States,
Canada, the European Union, China, Hong Kong, Taiwan, Southeast
Asia, Japan, South Korea and the Middle East.

During the January to April period, Indonesia reaped some $280
million in revenue from plywood exports. (pwn)