Fibreboard makers in for better times

 

THE price of fibreboards in the international market is on the uptrend, increasing almost 20% in the past three months.  

At the same time, demand for the product was also showing a positive trend, said Evergreen Fibreboard Bhd executive director Kuo Jen Chiu. 

He said fibreboard manufacturers in Malaysia stood to benefit as 70% of their production was for export. 

"One main factor which contributes to the trend is the ban on illegal logging activities by Indonesia," Kuo said in an interview with StarBiz.  

 

Previously, the Indonesian authorities were not able to control illegal loggings partly because the penalties were not high.  

Kuo said Indonesia was now seriously tackling the issue due to constant pressures from the International Monetary Fund (IMF) and Green Peace Movement. 

He said as a result, very little illegal wood was available in the market, unlike in the past.  

Kuo said that previously, there used to be 120 factories producing plywood in Indonesia and the majority did not have a licence to harvest the woods. 

"Strict enforcement by the Indonesian authorities have forced half of the factories to close down," he said. 

This has resulted in the shortage of plywood to produce wood-based products, thus pushing up demand for fibreboards. 

He said fibreboard was the best alternative for natural woods for the furniture industry. The latter is becoming costlier and scarcer as more forests are cleared for development. 

Kuo said the number of big trees, especially tropical wood species, was dropping; hence better prospects for engineered wood panels.  

He said consumers worldwide were concerned about cutting down trees from forests for the furniture industry. 

"They want to preserve the environment and at the same time need to substitute for tropical woods for furniture making," said Kuo. 

He said the best substitute was fibreboards made of tree species cultivated from plantations.  

Kuo said plantation species grew faster and were renewable, unlike natural forest trees which could take 50 to 100 years before they could be harvested. 

He said Malaysia still had huge land areas for rubber trees, and with more than 1.3 million acres of standing trees, the rubberwood supply could last up to 50 years. 

He said trees grew faster in the tropical climate than in temperate countries and the local fibreboard industry did not compete with furniture makers when it came to rubberwood supply. 

"We use all parts of the trees which we crush into woodchips, whereas furniture makers only go for the trunks with no defects," Kuo said. 

He said Malaysia, Indonesia and Thailand still enjoyed the lowest cost for producing fibreboards in the world due to the abundant supply of raw materials. 

Kuo added that China was not a threat in the fibreboard industry in the region as the production cost there was even higher that in the three countries. 

He said the price of woodchips from the industry in China was high and the country had to rely on imports as the local supply could not meet the requirement. 

Kuo said the main challenge for the Malaysian fibreboard industry in the future was to lower production cost.