The president of Shing Yang commented that this may be unusual measure to restore Japan market but the plan is to reduce the production by 30%. The main target is to reduce total inventories in Japan down to proper level and the market of imported plywood gets back to normal level.
Imported plywood market in Japan has been suffering poor demand since August last year and export prices have kept dropping.
Total supply in 2015 was 17.3% less than 2014 but the market stayed stagnant without seeing the bottom for more than six months. Orders for Malaysian plywood manufacturers are down by about 20%. The market in Japan further deteriorated in 2016 so the orders to Malaysia dropped further.
In this shrinking market, the export prices of 3x6 JAS coated concrete forming panel are down by about $50 compared to November last year. Malaysian ringgit was weak to cover lower dollar export prices but now ringgit is rebounding so minor mills are suffering loss.
The president stated that it is not reasonable thinking that the export prices should be reduce according to Japanese market prices and tired of looking at endless downward spiral of Japan market, Shing Yang decided to withhold the supply until the inventories in Japan are properly reduced and the market improves markedly.
Plywood mills in Sarawak are facing severe log supply shortage after one year by tight control of illegal harvest law so cost of logs climbed considerably and it is urgent matter to improve profitability.
Shing Yang considers shifting from limited sources of natural grown trees to low cost planted trees then also reviews average sales prices by looking at other markets like India, Australia, the U.S.A., Africa and South America.
