Monday, 24 March 2014

Myanmar log export ban to boost timber prices

KUCHING: Myanmar’s upcoming ban on log exports will have a positive effect on Malaysia’s timber sector on the back of relatively stable demand from India and Japan.

RHB Research Institute Sdn Bhd (RHB Research) analyst Hoe Lee Leng said Myanmar will start to ban log exports from April 1 in a bid to eradicate wood log smuggling and conserve its nation’s forests.

The research firm observed that Myanmar is the fifth-largest tropical log producer and third-largest exporter in the Asia Pacific region.

The research firm believed that Malaysia’s log prices will be undergoing a re-rating as Myanmar caters to more or less the same export markets as Malaysia in terms of tropical log exports.

With Myanmar following Indonesia’s ban on exporting logs, all logs harvested in Myanmar will have to be processed domestically and exported as downstream products such as plywood, the analyst explained.

“Looking back at history, when Indonesia banned log exports in 2001, Malaysia went from having a 43 per cent log export market share to a 58 per cent market share,” Hoe observed.

“In view of this development, we expect tropical log prices to start to go up again from 2H2014, after the existing inventory of logs held at importing countries declines.”

As of year-to-date, the analyst noted that log prices have been relatively stable.

To take into account the impact of Myanmar’s export ban, the research firm raised the log price assumptions for 2014 and 2015 by five to seven per cent to US$250 to US$270 per cubic metre.

Although Myanmar’s export ban should have a knock-on effect on plywood supply and prices, RHB Research at this point of time has maintained its plywood price assumptions, growing at two to three per cent year-on-year (y-o-y) for 2014 and 2015.

The analyst explained that the price assumptions was based on lacklustre demand from Japan.

Hoe pointed out that while Japan continued to witness good housing project development which grew 11 per cent in 2013 and 12.3 per cent y-o-y in January 2014, plywood import volume did not rise by the same quantum in 2013, growing marginally 3.3 per cent y-o-y.

source: The Borneo Post
Related Posts Plugin for WordPress, Blogger...