Tim Foster, managing director of Tigerwood Ltd, explains how the plywood market is changing
Readers may have been given the impression from the Asian market report, “Indonesia faces double environmental challenge”, that plywood prices are moving to the levels of 2003.
In fact, we are on the brink of a global change that some compare with the tumultuous trading of 1973/4.
In essence, the actions two years ago to address raw material sustainability and the renewed focus on illegal and irresponsible harvesting have resulted in many factories in South-east Asia and South America experiencing a severe shortage of raw material. This has combined with the current rains that are making log extraction.
In isolation, many would say “here we go again”: prices will go up briefly but then it will all fall apart. This time, I believe, this will not happen. Prices of tropical hardwood plywood in particular have risen some 35% over the past three months. This is by virtue of a shortage of production, as well as ever-increasing freight costs as China especially consumes more and more raw materials. The lack of suitable shipping and port berths has pushed charter rates up every month to unprecedented levels.
Other consuming markets are experiencing sustained demand, adding to the pressure for product. This price increase will eventually plateau but, in effect, we are reaching the prices that should be economic for factories to produce a reduced global volume of legally and sustainably harvested logs. This may be just in time to save what is left of the renewable forest that we all need for the future.
The “free-for-all” in the past 10 years has done little to help producers or the environment globally.
Surely the emphasis should be on partnership between the producers and their agents and importers. From this, importers will secure regular supply and realise their true historical role of holding ready stocks from reputable producers to enable them to service their customers.
