KUCHING: The recent export of the first batch of European Union Deforestation Regulation — (EUDR) compliant plywood to Poland may open up new market opportunities for Sabah’s timber sector, according to GTI-Woodbased Panel (GTI-WBP) report.
The export of the EUDR-compliant plywood, comprising 45.73 cubic metres, was produced by Integrated Wood Processing Sdn Bhd in Tawau.
The raw materials for the production of the plywood were responsibly sourced from Sapulut Forest Development Sdn Bhd, a sustainable forest management license agreement licensee under the Sabah state government’s jurisdiction, according to Sabah Forestry Department.
“This pioneering shipment reflects Sabah’s readiness to meet stringent international environmental standards, positioning its timber industry for greater market access and competitiveness in Europe. It also underscores the strong collaboration between the Sabah Forestry Department, local timber industry stakeholders, and international partners in promoting sustainable and responsible forestry.
“This achievement is a testament to Sabah’s commitment to sustainable forest management and our proactive approach to meeting global market demand,” the department’s chief conservator of forests Datuk Frederick Kugan said in a recent press release.
He said through compliance with the EUDR, it not only enhances the credibility of Sabah’s timber products but also contributes to global efforts in combating deforestation and climate change.
“Exporting EUDR-compliant products presents significant challenges as the entire supply chain must undergo rigorous re-evaluation, including implementing new data collection and tracking systems. The Sabah Forestry Department has been instrumental in this efforts, enhancing its capacity to provide the geolocation and traceability data required by the EUDR. This improvement facilitates better monitoring of forest activities and ensures transparency in timber supply chains, aligning with international environment standards,” added Kugan.
Meanwhile, in October 2024, the GTI-Woodbased Panel Index registered 46.1 per cent, a decrease of 1.3 percentage points from September, was below the critical value (50%) for seven consecutive months. This indicated that in the GTI pilot countries, the overall business prosperity of wood-based panel industry, represented by the index, shrank from the previous month.
GTI-WBP index reading above 50 per cent indicates that the industry prosperity is generally expanding; below 50 per cent indicates that it is generally declining.
The pilot countries include Indonesia, Malaysia, Thailand, Gabon, Republic of Congo, Ghana, Brazil, Mexico and China. In 2022, the total production of wood-based panel in these nine countries was 336 million cu m accounting for 63.8 per cent of the total global production volume of wood-based panel.
The GTI-WBP index takes leading woodbased panel enterprises in GTI pilot countries as the survey objects. Each month, the enterprises need to fill the GTI index questionnaire, including information of production, orders and export, employees, logistic, etc. Then the GTI-WBP index will be calculated and analysed, and the report will be released at the middle of the following month.
With the support of the International Tropical Timber Organisation (ITTO), the GTI platform has set up focal points in pilot countries, including timber producing and consuming countries.
In October, the demand for wood-based panels was still declining in pilot countries.
“This month, both new orders index (46.6%) and export orders index (43.5%) registered below the critical value of 50%, indicating a month-over-month decline in the overall performance of such orders. And data for the past three months revealed that the business pressure of wood-based panel industry mainly came from the downturn in the international market.”
On the supply side, the report said the downward trend in wood-based panel production had lasted for seven months. “This month, the production index registered 45.3%, a decrease of 4.1 percentage points from the previous month, still below the critical value of 50%.
“While reducing the production of wood-based panels, the sample enterprises also cleared the inventory of finished products to alleviate pressures from capital shortages, rising production costs and not enough warehouse space.
“In term of prices, the purchase price index for raw materials registered 61.3%, above the critical value for 4 consecutive months, indicating a continued upward trend in raw material prices, which was mainly due to inconvenient transportation, increased logistics costs, and raw material shortages in some countries.
“Timber enterprises’ cost pressure was particularly prominent in Ghana, Mexico and Malaysia as raw material prices in these countries had been rising for several months,” added the report.
In September 2024, Brazil’s exports of tropical plywood reached US$1.6 million in value and 2,700 cu m in volume, representing a year-on-year growth of 33 per cent and 35 per cent respectively.
The report said on October 11, 2024, the European Commission announced that it decided to initiate an anti-dumping proceeding concerning imports of hardwood plywood originating in China.
The product subject to this investigation is plywood consisting solely of sheets of wood other than bamboo and okoume, each ply not exceeding 6mm thickness, with at least one outer ply of tropical wood or non-coniferous wood, of species specified under subheadings 4412 31, 4412 33 and 4412 34.
In October, the main challenges reported by GTI-WBP enterprises include declined consumers’ purchasing power (Thailand); insufficient orders (China); workers lacked commitment and absenteeism was severe (Brazil); the prices of raw materials rose while it was difficult to increase the selling prices of products (Mexico), and frequent power outages, poor road conditions and higher production costs posed challenges (Ghana).
To mitigate the challenges, the main suggestions from enterprises in pilot countries included seeking new consumers and conduct more online sales (Thailand); invest in training and seeking institutional incentive programme for workers (Brazil); restrict imports and encourage consumers to use domestic panels (Mexico), and implement a price control mechanism that takes into account the rise of raw materials prices (Ghana).
