KUCHING: The international demand for wood-based panels has risen further last month, greatly benefitting manufacturers and suppliers in pilot countries monitored by International Tropical Timber Organisation (ITTO).
In July, the Global Timber Index-Woodbased Panel (GTI-WBP) Index registered 59.3 per cent, up 1.6 percentage points from June, and above the critical value (50%) for the fourth consecutive month.
This indicated that in the GTI pilot countries, the overall business prosperity of wood-based panel industry represented by the index expanded from the previous month.
The pilot countries are Indonesia, Malaysia, Thailand, Gabon, Republic of Congo (ROC), Ghana, Brazil, Mexico and China.
In 2023,the total production of wood-based panels in these nine countries was 336 million cubic metres (cu m), accounting for 50.9 per cent of the global production volume.
On the demand side, the overall demand for wood-based panels continued to grow in the pilot countries, with all demand-related sub-indexes above the 50 per cent critical value.
“This month (July), the new order index rose by 6.8 percentage points to 62.7 per cent, the export orders index fell by 1.7 percentage points to 52.8 per cent, suggesting that market demand (domestic demand in particular) grew compared to the previous month.
“In addition, the existing orders index fell by 3.4 percentage points to 51.5 per cent (still above the critical value), indicating that the total volume of orders on hand increased slightly, though the degree of growth was smaller than that of the previous month.
“It is worth noting that the international market demand for wood-based panels had remained in the expansion terrority for four consecutive months, one contributing factor of which is that fearing US tariff policies will push up product prices, some clients of WBP enterprises had begun stockpiling large quantities of goods in advance,” according to the latest monthly GTI-WBP report prepared by the Global Green Supply Chains Initiatives (GGSC).
On the supply side, the report said the supply of wood-based panels in the pilot countries showed an upward trend for the fifth consecutive month, with the production index registered 63.2 per cent, an increase of 2.1 percentage points from June.
“With relatively strong demand in the international WBP market, enterprises had accelerated capacity release, keeping operating rates at a high level.
“In addition, the inventory index of finished products stood at 59 per cent, remaining in the expansion terrority for the third consecutive month, indicating that WBP manufacturers should remain alert of potential overcapacity risks and strengthen demand-side analysis and forecasting,” added the report.
In terms of prices, the report said the purchase price index for raw materials recorded 59.1 per cent last month, remaining in the critical value for the 13th consecutive month, indicating that amid insufficient log supply in many countries, it was still difficult to alleviate cost pressure from raw materials.
Data also showed that the purchase price of raw materials increased in most pilot countries.
In addition, enterprises faced cost pressure from labour, logistics, electricity, taxes, among others, and were hoping for government’s tax reductions or subsidies to help ease these burdens.
On other developments, the report said in the first half of 2025 (1H2025), China’s plywood industry saw a decline in the number of enterprises but an increase in total production capacity based on the latest data from the Industrial Development Planning Institute of China’s National Forestry and Gassland Administration.
China’s fibreboard industry also experienced a decrease in the number of enterprises and a continued contraction in the total production capacity whereas the particleboard industry saw a slight decline in the number of enterprises and a slowdown in the capacity growth.
Over in Brazil, the country’s tropical plywood exports climbed by three per cent in volume in June to 3,000 cu m from 2,900 cu m in May but the export value fell by 11 per cent to US$1.7 million from US$1.9 million in the previous month.
On the main challenges reported by GTI-WBP enterprises, these included log supply volume depended on weather (Malaysia); there were intense competition in market prices of products (China); enterprises faced price pressure from competitors (Mexico);the costs of raw materials, including logs and glue, were high (Ghana); fuel supply was insufficient for the production activities (ROC); there was insufficient labour while employees lacked capabilities (Thailand); road conditions were poor, and the supply of raw materials was delayed (Gabon) and there was fiscal uncertainty due to US tariffs (Brazil).
To address the various challenges, enterprises in China suggested expansion into international markets to increase the volume of orders whereas their counterparts in Mexico called for enhancement in marketing and increase the added value of domestic products.
Brazilian enterprises suggested adjustment of business strategies based on the results of US tariff hike while those in Thailand urged training for workers to handle temporary tasks.
Ghana’s enterprises wanted government to come up with subsidies while their peers in Gabon called for improvement in the conditions of highways and railway to accelerate logistics.
