Reports from Malaysia & Indonesia

 

Prices for logs from Sarawak rose fanned by strong demand due to construction and development projects in India, China and Middle-Eastern countries. The monsoon season helped to push prices further up as logging became difficult and dangerous in the wet environment. Some timber traders were speculating that prices of logs might increase by at least 30% by the end of January 2007.

 

Timber demand in China remained strong in tandem with its economy that was forecast to grow 9.5% in 2007, according to the Chinese Federal Government information Center. About 70% of all timber imported by China was processed into furniture, plywood and other products for export, mainly including timber was also strong in India, as the Indian Rupee had been boosted by lower crude oil prices.

 

Prices of Malaysian plywood and panel products continued to surge as demand remained strong in Japan. Panel products, particularly particleboards, were also enjoying a domestic boom as several Malaysian furniture manufacturers switched over from rubberwood. These developments had caused share prices of several timber companies to rise in the Kuala Lumpur Stock Exchange.

 

 

Prices for Indonesian timber products, especially plywood, rose in early November as more importing countries took a second look at Indonesia as an additional supplier of timber products, albeit concerns over source and poor infrastructure. Some importers had expressed worries about the tight raw material supply situation in Malaysia.

 

Importers from India were particularly interested in Indonesian timber products to meet the mid-range to low-end markets. This had motivated Indonesian exporters to explore markets in Pakistan and Bangladesh. Indonesia was also seeking more interest from China. Having China's enormous consumption of raw materials in mind, the Indonesian House Speaker Agung Laksono had endorsed the Indonesian House of Representative to attract more Chinese investment into Indonesia. Indonesia was also intending to address non-tariff barriers in the form of strict quality standards imposed by Japan on timber products.