The president of Shing Yang commented that this may be an unusual measure to restore the Japanese market but the plan is to reduce the production by 30%. The main target is to reduce total inventories in Japan down to a realistic level until the market of imported plywood gets back to a normal level.
The 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 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.
Plywood mills in Sarawak are facing severe log supply shortage after one year by the tight control of the illegal harvest law so the cost of logs climbed considerably and it is now an 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 US, Africa and South America.
