Indonesia expected to phase out raw rattan exports

ITTO's Tropical Timber Market Report
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The Indonesian Industry Ministry is widely expected to phase out the export of raw rattan over a three years period commencing early 2012 in a bid to revive the local rattan industry. A decision on this is expected in December 2011. The Ministry had earlier submitted recommendations to the Trade Ministry for a new rattan export regulation, including a three-year export ban and a transition period. The debate on a rattan export moratorium gained momentum over the past few months as the 2009 Trade Ministry regulations on rattan export quota expired in August this year.

The previous regulations allowed for the export of a total of 35,000 tons of washed and sulphurised rattan of 4 to 16mm in diameter. It also stipulated that exports of semifinished rattan such as sega and irit were permissible as long as rattan producers produced a written commitment that they have supplied rattan to the local industry. Nevertheless, the rattan furniture industries and associations regarded the regulations as ineffective in assuring an adequate supply of raw rattan to meet the demands of the local industry.

Rattan exporters counter-claimed that the local industry could not absorb the large volume of raw rattan produced by Indonesian rattan producers. The Industry Ministry estimated that local industry could absorb up to 63,000 tons of semi-finished rattan. Indonesia is the world’s largest rattan producer accounting for some 80% of worldwide production. Indonesia also exported 33,033 tons of semi-finished rattan, valued at US$32.32 million, while exporting 4,275 tons of rattan furniture worth US$16.09 million in 2010, according to data provided by the Industry Ministry.

Poor company results in Indonesia partly due to raw material shortages
Indonesian publicly listed timber companies are citing poor market conditions for Indonesian timber products as the main reason for poor corporate performance in the third quarter of this year. In a consolidated financial report submitted to the Indonesia Stock Exchange (IDX), PT Sumalindo Lestari Jaya Tbk reported a nett loss of Rp.209.05 billion (US$23.39 million) in the first nine months of 2011, after reporting year-on-year profits of Rp.15.92 billion in 2010. A sharp decline in export sales contributed to the losses. Sumalindo recorded sales of Rp278.08 billion up to the end of the third quarter, a decline of about 43% from Rp489.08 billion for the same period in 2010.

PT Sumalindo Lestari Jaya Tbk’s activities comprise mainly timber processing, logging activities and operation of industrial timber plantations in addition to export, import and local trading. It has a combined total concession area of 448,986 ha. in East Kalimantan. The group has six direct and indirect subsidiaries engaged in the logging business and operation of industrial timber plantations.

It also has two subsidiaries that are engaged in the power generation and glue manufacturing industry. The company and its subsidiaries have a combined total concession area of up to 804,786 ha. in East Kalimantan. Integrated timber product manufacturer PT Tirta Mahakam Resources Tbk reported a better performance, albeit with a nett loss of Rp1.03 billion up to the end of the third quarter this year, after registering losses of Rp19.77 billion for the same period last year.

PT Tirta Mahakam Resources Tbk is involved in the manufacturing and marketing of plywood and panelproducts. It owns and operates an integrated wood processing factory located in East Kalimantan. Its products range from floor boards, general plywood, laminated plywood, concrete panels, block boards, to wood mouldings.

Its products are distributed and marketed locally in Indonesia and are also exported to Japan, Taiwan, Korea, Hong Kong, the US, Europe and India. An analyst attributed the decline in profits of these listed companies to a shortage of raw material supply within Indonesia which is said to be becoming acute.

Indonesia Log PricesIndonesia Log Prices

Indonesia logs, domestic prices US$ per m³
Plywood logs Face Logs 221-264
Core logs 209-238
Sawlogs (Meranti)   218-278
Falcata logs   186-217
Rubberwood   94-98
Pine   195-238
Mahoni (plantation mahogany)   504-535
Indonesia Sawnwood Prices
Indonesia, construction material, domestic US$ per m³
Kampar (Ex-mill) AD 3x12-15x400cm 208-227
KD 222-257
AD 3x20x400cm 242-265
KD 243-272
Keruing (Ex-mill) AD 3x12-15x400cm 257-271
AD 2x20x400cm 247-265
AD 3x30x400cm 230-249
Indonesia Plywood Prices
Indonesia ply MR BB/CC, FOB US$ per m³
MR Plywood (Jakarta), domestic
Other Indonesia Panel Prices
Indonesia, Other Panels, FOB US$ per m³
Particleboard Export     9-18 mm 244-253 
Domestic 9 mm 226-238
               12-15mm 221-233
               18mm 217-228
MDF Export     12-18mm 278-293
Domestic 12-18mm 261-273
Indonesia Added Value Product Prices
Indonesia, Mouldings, FOB US$ per m³
Laminated Boards Falcata wood 326-339
Red Meranti Mouldings 11x68/92mm x 7ft up
  Grade A 520-551
Grade B 478-500
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