The Sarawak Timber Association expects tropical plywood prices to increase as inventories in Japan drop, according to a report by The Star in Malaysia.

Panel products committee chairman Stephen Lau Lee Kiong said Japan imported about 1.5 million m3 in 2009, or more than 50% of Sarawak’s plywood production. But inventories have been reduced consistently in the past 12 months from about six months of supply to one month. The normal level should be between two and three months.

Mr Lau said plywood prices for the Japan market could increase further if mills in Sarawak and Sabah maintain current production levels.

Sarawak’s plywood exports to Japan are mainly used for concrete formwork and in flooring products. But its 29 plywood mills, which have a combined capacity of 4 million m3/year, produced less than 3 million m3 last year because of weak global demand. Mr Lau said most mills had cut production by 20-50% from 18 months ago.