Malaysia: Growth in furniture exports to the US

ITTO's Tropical Timber Market Report
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Preliminary figures for Malaysian timber exports in 2012 suggest they totalled RM 19.9 billion (approximately US$ 6.3 billion) however, the statistics are still being finalised.

The Plantation Industries and Commodities Minister Bernard Dompok was reported by the Star newspaper as saying the furniture sector contributed RM 8 billion (approximately US$ 2.5 billion) or around 40% of the total value of wood product exports in 2012.

The minister emphasised the growing importance of export earnings by the furniture sector. In 2012 Malaysian furniture was exported to 199 countries worldwide and the value of furniture exports increased more than 4% over levels in 2011. An almost 11% increase in furniture exports to the United States was recorded.

New Customs regulations introduced
Kuala Lumpur regularly plays host to two international furniture fairs which attract thousands of international buyers.

These furniture fairs come at a time when the timber industry is struggling to meet new Malaysian regulations for exports to Europe.

As of March 2013 furniture exporters in Malaysia must apply for an export permit from the Malaysia Timber Industry Board to satisfy revised Malaysian Customs requirements.

The new Malaysian Customs Prohibition List applies to wooden furniture and 11 other types of wood products such as laminated scantling, flooring, etc. The new Malaysian export regulations are aimed at providing EU importers with credible evidence to satisfy the due diligence requirements of the EUTR.

Industry analysts are expecting exports to EU markets to dip in the short term as Malaysian exporters gradually become familiar with the new regulations and as information on what is required and the procedures to be followed by exporters.

Despite the efforts of the trade associations and government agencies over the past few months some exporters are still not totally familiar with the new procedures.

Sabah releases export figures for 2012
The Sabah state government recently released official statistics on the 2012 FOB value of wood product exports. Plywood exports were valued at RM 1,018,134, 684 (approx. US$ 474 million), sawntimber RM 395,455,670 (approx. US$ 126 million), mouldings RM 98,360,775 (approx. US$ 31 million), laminated board RM 81,301,973 (approx. US$ 26 million), and veneer RM 73,335,818 (approx. US$ 23 million).

The top buyers of Sabah plywood in 2012 were Japan 21.1%, followed by Peninsular Malaysia 18.3%, South Korea 9.7%, Mexico 9.6% and USA 8.5%.

The main buyers of Sabah sawnwood were Thailand 30.1%, followed by China 13.3%, Taiwan P.o.C 11.8%, Japan 10.8% and South Africa 9.2%.

Low log and plywood prices squeeze 2012 profits
In Sarawak, two major listed timber companies are in the news as they have just released their financial reports. Jaya Tiasa Holdings was reported by the Star newspaper as expecting a better year in 2013 after a weak 2012.

The company says it is optimistic that the improved housing starts in USA and the tight log availability, which is driving up log export prices, will help boost this year’s earnings.

The company’s profits fell in 2012 because the price of logs and plywood fell by 21% and 11% respectively compared to levels in 2011.

The Star also reported on the financial reports from WK Holdings and stated that profits were down in 2012 due to lower log production and lower than expected income from log sales.

WTK said in notes attached to its latest financial results: “Average round log prices dropped by 7.8% and at the same time sales volume decreased by 3.4%. The Group’s key export markets for round logs in 2012 were India at 79% and China (11%) while the remaining 10% was exported to ASEAN countries”.

On plywood, WTK sales volume increased by 26% in 2012 but any gain from the increase in sales volume was offset by a 7.6% drop in average prices. The bulk WTK plywood sales (88%) were to Japan, the balance going to Taiwan P.o.C.

Log Export Prices (Sarawak)

Meranti SQ US$ 255 – 250
Kapur SQ US$ 330 – 345
Keruing SQ US$ 250 – 270
Selangan Batu regular US$ 490 – 530

Export Plywood Prices

Malaysia ply MR BB/CC, FOB US$ per m³
9mm & up
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