Malaysia: Election fever dampens trading in domestic market

ITTO's Tropical Timber Market Report
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Malaysia went to polls for the thirteenth time on 5 May to fill 222 parliamentary seats. The intensive political campaigning caught everyone’s attention as can be seen by the 85% voter turnout. The ruling coalition, Barisan Nasional, was returned to power but with a smaller majority in the Federal Parliament.

Peninsular Malaysia traders waiting for market signals
The timber market was very quiet during the election campaign period with traders, especially those dealing in sawn timber, reporting poor market sentiment in both the local and overseas market. Throughout the timber industry there was a mood of “wait and see”. However, traders are optimistic that business in the domestic market will quickly return to normal.

Plywood traders also reported slow trading in the domestic market as housing developments slowed. One major trader did report that shuttering board prices increased by almost RM2.00 to RM45 a sheet (approximately US$ 15.00) after the government implemented the revised minimum wage policy. However, the traders are not confident that this slight increase will be maintained.

Other major traders reported 12 mm (5 ply) 4’ x 8’ WBP Shuttering Board 100% tropical timber selling at RM43.00 a sheet (approximately US$14.30) and 12 mm (7 ply) of the same specifications selling at RM47.00 a sheet (approximately US$15.70). Plywood manufacturers are looking out for the start of work on two large development projects due to begin, one in the south Johor Iskandar Area and the other the Mass Rapid Transport project in the central region.

Peninsular Malaysia log prices
Sawmills in Peninsular Malaysia reported log prices ex Matau – Dungun (Terengganu state) as follows:

Species RM / ton US$ / ton (approx)
Keruing 1,450 483
Meranti Seraya 1,380 460
Meranti Sarang Punai 1,230 410
Meranti Rampai Daun 1,300 433
Balau 2,500 833
Chengai 4,300 1,433
Mersawa 1,450 483
Merbau 2,600 867

ton equivalent to 50 cu.ft

Analysts report that log prices have dropped on average 6% compared to levels in December 2012. Most mills reported adequate log inventories and are not increasing stock levels as there are no clear indications of market movements.

Sarawak plymills report slow business
As in Peninsular Malaysia, the period leading up to the elections saw a dull timber market in Sarawak and plywood mills reported generally slow business. One trader exported MR BB/CC 2.7 mm US$570 per cu.m FOB, and 9 mm & up to Taiwan at US$450 per cu.m FOB.

Malaysia’s exports of wood products Jan – Dec 2012

  Product FOB value (RM) % chng 11/12
1211 Gaharu Woodchips 8,548,072 -12.6
1212 Sandalwood chips 438,412 100.0
4401 Fuel Wood 181,593,878 70.2
4403 Logs 1,691,311,534 -9.2
4404 Hoop Wood 26,649,457 -1.9
4405 Wood Wool & Wood Flour 773,224 278.4
4406 Sleepers 20,565,353 17.3
4407 Sawntimber 2,455,647,672 -1.2
4408 Veneer 333,234,284 2.7
4409 Mouldings 711,905,612 -7.9
4410 Chipboard/Particleboard 339,196,696 4.4
4411 Fibreboard 1,149,052,575 1.9
4412 Plywood 5,136,529,695 7.4
4413 Densified Wood 6,676,880 90.0
4414 Wooden Frame 142,410,969 7.6
4415 Packing Cases 183,748,378 n.a
4416 Casks, Barrels, Vats, Tubs 302,254 -67.5
4417 Tool Bodies & Handles 1,923,838 -13.2
4418 Builders Joinery 993,050,327 2.9
4419 Table & Kitchenware 3,749,856 -17.6
4420 Wood Marquetry 8,191,381 -16.4
4421 Other Articles of Wood 49,896,379 -8.1
4706 Pulp 122,700,359 240.0
  Wooden Furniture 6,528,766,631 n.a
  Rattan Furniture 21,218,442 n.a
14011 Bamboo 220,200 -1.2
14012 Rattan Whole & Splits 3,048,893 78.9
A3916 Wood Plastics Composite 5,606,685 7.2
Grand total 20,196,591,975  

Source Dept of Statistics, Malaysia

Sarawak log export prices (FOB per cubic metre)

Meranti SQ US$ 253 - 265
Kapur SQ US$ 340 – 350
Keruing SQ US$ 325 - 340
Selangan Batu Regular US$ 505 - 535

Acacia mangium truck flooring to be developed
The Sabah Timber Industries Association (STIA) has appointed Forest Research Institute Malaysia (FRIM) as its technical partner for the development of added value products from local plantations of Acacia mangium. This collaboration was made possible by a government Community Innovation Fund grant of RM 500,000 (approximately US$ 167,000).

Acacia mangium plantations were first established in Sabah in the 1980s. At present the main markets are for logs to Vietnam and China and chips to Japan. One of the objectives of the STIA cooperation with FRIM is to develop truck flooring boards from Acacia mangium for the export market.

The Daily Express newspaper quoted Dr Tan Yu Eng of FRIM as saying: “The scope of the cooperation covers principally development of effective means to improve the drying quality of Acacia mangium through the introduction of some pre-treatment techniques, exploring the possibility of applying saw-dry-rip in its sawntimber conversion, and the development of finger jointed truck flooring boards in compliance with regional market requirements”.

Tan went on to say “the challenge is to improve quality and recovery, followed by product development so as to enhance the profitability of the acacia industry in Sabah”.

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