Plywood market looking up, says Apkindo chief

JAKARTA (JP): Plywood prices in international markets have gradually started to recover after a sharp decline since early this year, according to the Association of Indonesian Wood Panel Producers (Apkindo).

Apkindo executive director A. Tjipto Wignjoprajitno said Saturday the price in Asian markets reached US$260 per cubic meter late last month over $230 in June.

He said the demand for Indonesian plywood had also showed signs of increasing in the last two months, especially after Malaysian plywood producers cut their exports.

Demand from other Asian countries, especially from China, has increased significantly, he added. China signed a contract last month to buy about 100,000 cubic meters of Indonesian plywood.

He said the price of Indonesian plywood in China was encouraging because high quality plywood could fetch prices of between $250 and $260 per cubic meter.

The price is still lower than last year's average of $400 per cubic meter, Tjipto said.

He said the increase in overseas demand for the Indonesian plywood was partly due to a decline in Malaysian plywood exports, Indonesia's main competitor in the market.

The decline was due to the country's deficiency in the supply of logs, he said.

Indonesia is currently the world's biggest plywood producer with an annual output of 10 million cubic meters, of which 80 percent is exported.

Plywood, a wood panel product, is Indonesia's second largest non-oil and non-gas foreign exchange earner after textiles and textile products.

Apkindo estimates that Indonesia's foreign exchange earnings from plywood exports is expected to fall by 16 percent this year to US$3 billion from $3.58 billion last year, due to the drop in prices and export volume.

Tjipto said Indonesia's log production could slow down in the coming months as bad weather and heavy rainfall might hamper logging and log transportation activities.

He noted that the recent devastating flood in Samarinda, East Kalimantan -- the country's main producer of logs -- had significantly affected logging activities in the province.

"I've heard that several wood processing factories have been studying the possibility of importing logs to sustain their industry during the rainy season," Tjipto said. (gis)