KUCHING: After three consecutive months of growth, overall demand for wood-based panels in tropical countries monitored by the International Tropical Timber Organisation (ITTO) has started to decline again.
According to the Global Timber Index – Wood-Based Panel (GTI-WBP) Report for September 2025, the rebound in demand seen over the previous quarter may have peaked temporarily.
The GTI-WBP Index fell to 44.3 per cent in September, down 10.3 percentage points from August and slipping below the critical 50 per cent mark for the first time in five months — signalling a shift from expansion to contraction in industry activity.
The index tracks 10 pilot countries — Indonesia, Malaysia, Thailand, Gabon, Republic of Congo (ROC), Ghana, Brazil, Mexico, Ecuador and China — which collectively produced 207 million cubic metres of wood-based panels in 2023, representing 51.1 per cent of global output.
All demand-related sub-indexes dropped below the critical level in September: new orders fell to 47.6 per cent, export orders to 44.8 per cent and existing orders to 42.9 per cent.
“The decline in new orders was mainly from the international market,” the report noted. “As the wave of advance ordering spurred by US tariff policies came to an end, the global market for plywood products turned unstable and sluggish.”
On the supply side, production slowed after six months of growth, with the production index down sharply to 41.7 per cent — a 26.2-point decline from August. Meanwhile, the inventory index of finished products rose to 52.4 per cent, remaining in expansion territory for a fifth straight month, signalling persistent overcapacity risks. Manufacturers were urged to “control production capacity while driving innovation in sustainability, performance and product customisation” to escape intense competition.
Cost pressures also remained high. The raw material purchase price index stood at 58.2 per cent — its 15th month above the critical threshold — reflecting continued increases in log and input prices.
Producers in Ghana, Brazil and Mexico reported sustained price hikes for raw materials, while Gabon-based firms saw some relief but still faced rising logistics costs and low selling prices.
In Malaysia, manufacturers cited log shortages and weak plywood export demand, while Indonesian producers flagged sluggish conditions in Japan, a key export market. Thai firms faced skilled labour shortages, and Brazilian companies blamed US tariffs for slowing business activity.
To mitigate these challenges, Malaysian producers proposed cutting output, while Ghanaian companies suggested expanding trade fair participation. Thai firms recommended introducing alternative materials, and Chinese producers urged tapping new export markets. Gabon manufacturers highlighted the importance of certification to stay competitive.
Elsewhere, Brazil’s tropical plywood exports in August 2025 surged 87 per cent year-on-year to 2,800 cubic metres worth US$1.5 million, while Ecuador’s particleboard exports for the first half of 2025 fell 8.1 per cent to US$91.3 million, despite continued growth in key markets such as Peru, Mexico and the United States.
