Plywood producers expect export increase

JAKARTA (JP): The Association of Indonesian Wood Panel Producers (Apkindo) predicted on Wednesday that exports of plywood would start picking up again in the second quarter of this year after a drastic slump last year.

As in the first quarter of this year, exports of plywood would remain slow because many companies in Japan, the United States and Europe would reduce their imports during the winter and holiday seasons, according to Apkindo chairman Abbas Adhar.

"But I believe that demand and prices of plywood will increase in the second quarter. I expect our plywood exports to reach 8 million cubic meters worth US$3 billion this year,"

He added that plywood prices in China and Japan were already showing an upturn trend, although mildly. He noted that prices of plywood in Japan currently reached $300 to $310 per cubic meter.

The increasing prices of plywood should give a breathing space for local plywood producers who suffered a great deal last year due to scarcity of logs, the main raw material, and depressed prices.

Last year was worst of all. Foreign exchange earnings from plywood exports were unlikely to meet a target of US$2.7 billion last year due to the sluggish sales, Abbas predicted.

He attributed the lower exports to the weak demand and depressed prices to the economic crisis affecting several main destination countries, especially Japan and South Korea.

"We are still unable to state the exact amount of the foreign exchange earnings for last year because we are still waiting for more export data, especially for exports in December. But I believe they may be slightly over $2 billion, but below the initial target of $2.7 billion," he said.

Abbas said that the sluggish demand during the first semester of 1998 led to the plunge in plywood prices.

"Previously we predicted that the demand and prices would recover in the second quarter of 1998. In fact, they started to recover only in the third quarter in July," he said.

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

In 1997, the country's plywood exports totaled 7.85 million cubic meters worth $3.58 billion.

Director General of the Utilization of Production Forests Waskito Soerjodibroto predicted earlier this month that the country's foreign exchange earnings from exports of wood and other forest-related products would drop sharply in the 1998/1999 fiscal year.

Waskito attributed the decline to the drop in log production and the sluggish sales of Indonesian wood-related products due to the economic crisis affecting several main buyers.

He said that export revenues from wood and forest-related products only reached $727.9 million in the April-October period. This amount excluded the foreign exchange earnings from pulp and paper exports. (gis)