Yen depreciation not yet hurting plywood

JAKARTA (JP): Japanese businesses expect to see prices of Indonesian plywood decline soon as a result of the recent depreciation of the yen against the U.S. dollar, an executive said yesterday.

Vice chairman of the Association of Indonesian Wood Panel Producers (Apkindo) Abbas Adhar said yesterday that, so far, the depreciation of the yen had not affected the volume of Indonesia's plywood exports.

"Indonesian plywood producers still want to keep prices as they are now because they consider the yen has not dropped low enough," he said.

Japan is one of Indonesia's major export destinations for plywood. Some 3.5 million of Indonesia's nine million cubic meters of plywood exports go to Japan each year.

Since exports to Japan are valued in U.S. dollars, any strengthening of the greenback against the yen would cause Indonesia's exports to be relatively more expensive.

The current rate is about 122 yen to a dollar.

Abbas said that later this week, Indonesia's plywood trading arm in Japan, Nippindo, would meet with Apkindo executives to discuss plywood prices.

Abbas said he was convinced prices would remain as they were because stocks in Japan were thinning.

He said the decline of the yen to around 124 to a dollar was not enough to cut prices of Indonesian plywood exports.

"I think that only when the yen falls to about 130 to 140 to a dollar can we start considering cutting back plywood prices," he said, as quoted by Antara.

He said although the depreciation of the yen now had no effect yet on plywood prices, he acknowledged that in the long run it could reduce the volume of Indonesia's plywood exports to Japan.

If Indonesia reduced its exports, he said, other countries, such as Malaysia, would quickly fill in the market.

Minister of Forestry Djamaludin Suryohadikusumo said earlier yesterday that he was not concerned about the effect of the yen's depreciation on plywood exports as it was currently a sellers' market. (pwn)