KUCHING: Rising raw material costs and weak demand for finished products are continuing to hurt wood-based panel manufacturers in several tropical countries.
In April 2026, the purchase price index for raw materials of Global Timber Index-Woodbased Panel (GTI-WBP) increased by 5.8 percentage points from March to 70.2 per cent, and remaining above the critical value (50%) for a long time.
This signals that the prices of logs and other related production materials continue to rise with April positing a significant increase. Data show that in April, the hike in the purchase price was particularly notable in Gabon, Brazil and China.
At the same time, companies also faced considerable cost pressures from labour, energy, transportation and taxes, according to the latest monthly GTI-WBP report.
The report, which is prepared by Global Green Supply Chains Initiative (GGSC) in collaboration with International Tropical Timber Organisation (ITTO), covers 10 pilot countries including Malaysia.
Together these countries produced 218 million cubic metres (cu m) of panel products in 2024, accounting for 52.3 per cent of the total global production volume.
In April, the GTI-WBP Index registered 46.6 per cent, down 4.1 percentage point from the previous month.
After a brief rebound, the index fell back below the 50 per cent critical value, thus indicating that in the pilot countries, the overall business prosperity of wood-based panel industry represented by the index shrank from the previous month.
“On the demand side, overall demand for the pilot countries’ wood-based panels decreased slightly.
This month (April), the new orders index came in at 49.2 per cent, a drop of 4.3 per cent point from March, falling back into contraction territory below 50 per cent.
“The export orders index edged up 0.8 percentage point to 45.5 per cent but remained in contraction.
The data suggest that the decline in new orders was mainly driven by international markets,” added the report.
However, positive signals emerged in April in the construction and real estate sectors in China, Brazil, Mexico and Ecuador which could help boost domestic demand for wood-based panels.
On the other hand, foreign trade in wood-based panels for pilot countries was hampered by factors, such as geopolitical conflicts, tariffs and non-tariff barriers.
In addition, the existing orders index had remained below the 50 per cent mark for eight consecutive months, indicating that total orders in hand for wood-based panels were declining, and putting significant pressure on business of the enterprises.
On the supply side, the report said the production index for wood-based panels in April stood at 47.3 per cent, down 5.4 per cent point month-onmonth, returning to contraction territory and showing an overall pullback in production capacity.
“Looking at the past six months, total output of wood-based panels had been on a downward trend in all months except for a slight uptick in March.
The inventory index of finished products came in a 45.8 per cent, remaining below the critical value for three consecutive months, indicating continued destocking of wood-based panels,” added the report.
In April, manufacturers in pilot countries reported continued challenges which they have faced for some time.
In Malaysia, GTIWBP enterprises complained about the Sarawak market had excessive imports of plywood, weak global construction market and tight shipping space.
To address or mitigate these challenges, the enterprises in pilot countries had offered various suggestions.
These include adjust production plans, strengthen cost control, enhance coordination to ensure a stable supply of raw materials, closely monitor the global situation and explore alternative markets.
