JACK WONG – “There is no shortage feeling although port warehouses report that outgoing (plywood) volume is now much more than incoming volume, ” according to Japan Lumber Report (JLR), a trade journal published every two weeks.

KUCHING: Japan’s inventory of imported hardwood plywood, mainly from Malaysia and Indonesia, is running low.

But the depleting stock has yet to raise any alarm as Japan’s domestic demand for the imported plywood has started to decline due to the Covid-19 pandemic.

“There is no shortage feeling although port warehouses report that outgoing (plywood) volume is now much more than incoming volume, ” according to Japan Lumber Report (JLR), a trade journal published every two weeks.

The JLR publication is reproduced by the International Tropical Timber Organisation (ITTO) in its latest tropical timber report (April 16-30).

Japan has extended the state of emergency amid fears over a second wave of Covid-19, with lockdown measures remaining in place in all regions until May 31.https://sites.thestar.com.my/tsolnewsletter/default_story.aspx?s=business%2Fbusiness-news&k=commodities&ku=business

Quoting data from Japan’s finance ministry, the ITTO said Japan’s imports from main plywood suppliers in Malaysia dropped by about 15% to 72,200 cubic metres in February 2020 from 85,300 cubic metres in February 2019 although the volume was higher than 61,100 cubic metres in January 2020 (Jan 2019:91,200 cubic metres).

Similarly, Japan cut plywood imports from Indonesia by 15% to 63,800 cubic metres in February 2020 from 75,000 cubic metres a year ago.

“Although Japan had not experienced a major impact from the coronavirus (Covid-19) pandemic in February, there were signs in the construction and house building sectors that there was a slowdown.

“Year-on-year, Japan’s February imports of plywood (HS441210-39) dropped 17% and compared to a month earlier, import volumes were down 12.5%, ” said ITTO.

But surprisingly, the report said Japan’s imports of assembled flooring (HS441871-79) in the first two months of this year were sharply up from a year ago. Of the four categories of flooring tracked, HS441875 made up about 50% of Japan’s February imports, with most coming from Malaysia and Indonesia.

Last year Malaysia was Japan’s largest plywood supplier accounting for about 852,000 cubic metres or monthly average of 71,025 cubic metres while Indonesia exported 76,760 cubic metres or monthly average of 63,970 cubic metres to Japan.

Due to sluggish demand and rising export prices from Malaysia as a result of higher production costs, Japan has significantly reduced plywood imports from Malaysia and, in the meantime, sharply expanded its softwood production volume over the past two years.

The slowdown in imports from Malaysia has hit plywood manufacturers in Sarawak hard. In the first quarter of 2020 (1Q20), Sarawak’s plywood exports earnings fell to RM645mil from RM713mil in 1Q19 or down by 9.5%, according to Sarawak Timber Industry Development Corp general manager Hashim Bojet.

He said Japan remained Sarawak’s biggest importer of plywood valued at RM433mil in the quarter under review. Besides plywood, Japan also bought about RM129mil worth of other timber products from Sarawak in 1Q20.

During the same period, Sarawak exported RM143mil worth of logs, mainly to India.

Hashim said Sarawak’s lower exports of logs and timber products were due to the impacts of Covid-19 and the shift in market demand for higher-value timber products.

According to JLR, although the Malaysian government has restricted various activities to curb the spread of Covid-19, plywood mills in Sarawak are allowed to keep operating. But log harvesting and transporting are restricted as various permits are not obtainable since the government’s administration offices are closed to avoid the spread of the deadly virus.In an online survey conducted by the Department of Statistics to assess the impact of the pandemic on employment and income, it has been revealed that for the forestry and logging sectors, 6% of the workers were on half-pay leave, 18% on unpaid leave and 12% have lost their jobs.

The ITTO quoted another April survey carried out by the Federation of Malaysian Manufacturers on the impacts of the movement control order imposed by the government that revealed that some of the larger employers reported that they would be unable to sustain operations beyond three months.

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