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)