Indian wood panel makers have raised prices by 5 to 15 per cent, and Malaysian factories say nine in 10 firms are already disrupted, as the Strait of Hormuz crisis hammers tropical timber supply chains from West Africa to South America.
That is according to the latest market report by the International Tropical Timber Organization, which charts an industry-wide repricing from Kuala Lumpur to Bangalore to Ho Chi Minh City — and a Federation of Malaysian Manufacturers survey warning “the window to prevent it is narrowing.”
The Federation of Indian Plywood and Panel Industry has issued a series of price advisories, joined by the Kandla Timber Association, the Haryana Plywood Manufacturers’ Association, and the Rajasthan Plywood Manufacturers’ Association. All point to methanol, phenol and urea supply disruption as the core pressure. India imports roughly 1.3 million tonnes of methanol annually, with around 40 per cent drawn from the Arabian Gulf. The Strait of Hormuz accounts for 30 per cent of global methanol trade — a chokepoint now pushing crude oil above US$110 per barrel.
Production costs across Indian panel mills have increased by 4 to 6 per cent for plywood and by around 5 per cent for MDF and particleboard. The Gujarat Particle Board Association is now advising members to lift prices by at least 15 per cent. The All India Decorative Veneer Manufacturers Association has issued a 12 per cent increase, whilst the All India Edge Band Manufacturers Association recommends a minimum 15 per cent lift, citing raw material shortages.
With nearly 90 per cent of India’s crude oil sourced from imports, EY’s Economy Watch report warns the Middle East conflict would strip roughly one percentage point from GDP growth in the next fiscal year. Retail inflation could rise 1.5 percentage points above baseline if disruption persists. Employment-intensive sectors — textiles, paints, chemicals, fertilisers, cement and tyres — carry the sharpest exposure, with EY flagging that any contraction in jobs or incomes would further dampen domestic demand.
In Malaysia, the Federation of Malaysian Manufacturers survey found nine in ten firms are already affected or expect impact within four weeks. Some 69.5 per cent anticipate raw material shortages within a month. Nearly half of respondents reported industrial energy cost rises of 10 to 30 per cent, 22 per cent saw increases of 30 to 50 per cent, and 12 per cent now face hikes above 50 per cent.
“The risk of production stoppage and export contraction is real,” said FMM, calling for immediate and coordinated government intervention across fuel supply, raw materials and logistics.
Sarawak Timber Association chairman Henry Lau told the association’s annual general meeting that 2025 log production had fallen to 1,930,351 cubic metres. Plywood output dropped to approximately 550,000 cubic metres from around three million cubic metres in 2008. “Some operators have had to scale down or suspend operations,” said Lau, warning that parts of the industry may struggle to recover and urging Kuala Lumpur to review royalty, cess and premium charges.
Vietnam’s plywood sector is redirecting capacity toward the Middle East and South Asia as US market access tightens under a stacked tariff regime. That regime now combines a 20 per cent reciprocal duty with preliminary anti-dumping duties of 191.85 to 194.80 per cent on hardwood and decorative plywood, with final determinations due 11 May 2026. Saudi Arabia’s construction sector — valued at US$104.8 billion in 2024 and on track to reach US$174.4 billion by 2030 — now anchors that redirected supply, with the kingdom targeting 1.5 million new homes by decade’s end.
Drewry’s World Container Index held at US$2,287 per 40-foot container as of 2 April 2026. But Maersk has applied to US regulators for an emergency bunker surcharge of US$200 per TEU on head-haul routes and US$100 per TEU on backhaul, citing elevated fuel costs. For a typical 25-cubic-metre plywood shipment in a 20-foot container, the surcharge translates to roughly US$8 per cubic metre — manageable for higher-value film-faced formwork panels but corrosive for thin-margin commodity grades.
Brazilian exporters face a separate but compounding pressure, with US tariffs on timber products reaching 50 per cent in August 2025 before dropping to around 10 per cent in February 2026. The Rio Grande do Sul sector has absorbed cancelled orders and rerouted shipments, with Middle East logistics disruption adding to the residual US tariff impact in municipalities where timber processing drives the regional economy.
Indonesian furniture body HIMKI has responded by pushing for offshore distribution hubs in Europe, the United States and Canada to shorten supply chains and reduce exposure to shipping-lane volatility. Chairman Abdul Sobur argues the pivot has become essential as buyer confidence erodes across traditional export corridors.
In Peru, Association of Exporters (ADEX) data show that 2025 timber exports totalled almost US$70 million — a contraction of around 18 per cent from the US$85 million recorded in 2024 — a figure ADEX has characterised as the sector’s worst crisis in 25 years.
