In Vietnam, construction of large plywood mills by the Chinese capital has started one after another. In April a plywood plant with monthly production of 25,000m3 has started operation near Hanoi and another one with monthly production of 12,000m3 is to start up near Hanoi.

These plants purchase eucalyptus veneer in large volumes as raw material so smaller plants manufacturing for the Japanese market are not able to have enough veneer, says ITTO.

The large plants use both eucalyptus and acacia veneer but a majority use eucalyptus. Manufactured products are interior materials for trailer and base materials for floor heating for the US and Korea. These items are much higher priced so the large plants are unlikely to manufacture low priced crating plywood for the Japanese market.

Purchase competition of raw material veneer pushes plywood prices up as high as US$310 per m3 cost & freight, and further increases are expected.

This level of price is way too much for the Japanese market, says ITTO, and importers in Japan think that this is not a temporarily price increase but governed by structural change so future supply is very uneasy.