Global plywood producers can no longer rely on the construction market to survive and must upgrade production facilities to diversify into the “niche” flooring, high-density fibreboard and panelling markets.
That is according to Sheam Satkuru, executive director of the International Tropical Timber Organisation (ITTO), who spoke last week at the International Conference on Sustainable Management of Tropical Forests in Malaysia.
Instead, “they must upgrade their facilities and prepare to invest in new technologies and machinery to manufacture new plywood products,” with “the future of tropical plywood, to capture the niche market by adopting to changing demand for products both at the lower and higher-end users.”
Over the past twenty years, China has become the global engine room for plywood production, accounting for more than 71% of production in 2020, with Chinese-controlled interests now diversifying into Malaysia and Indonesia.
This consolidation follows a rapid transformation, with Ms Satkuru reporting that “tropical hardwood production has undergone major location changes, from Japan and Indonesia to Malaysia (until the early 2000s) and then to China, India and, to a lesser extent, Vietnam.”
“This is due to the relative competitiveness of plywood processing in the major producer countries and growth in plywood demand in China and India,” she said, adding that “declining availability of large-diametre peel quality logs, changes in production technology and the emergence of substitutes (like OSB)” have seen China and Vietnam emerge as tropical manufacturing hubs.
In China alone, up to 13,000 plywood mills fuel a booming industry with Rudolf van Rensburg, the co-author of the 197-page “China – Forest, Log & Lumber Outlook,” exclusively revealing to Wood Central that Chinese demand for plywood “grew from 8 million cubic metres per annum in the mid 1990’s to 80 million cubic metres in 2013.”
“China quickly became the world’s largest producer of hardwood plywood, capitalising on the world’s largest eucalyptus plantation,” Mr van Rensburg said, who has spent the last 12 months working on the world’s most comprehensive report into the Chinese forest industry.
This is supported by the “Tropical Timber Market” report, prepared by the Japanese Finance Ministry, which has confirmed that Japan has raised imports of plywood from China and Vietnam while sharply cutting shipments from Malaysia and Indonesia.
Japan is the number one market for plywood produced by Malaysia’s Sarawak region, one of the world’s engine rooms for timber production.
However, the region’s plywood volumes have sunk in recent years as log shortage price rises have curbed manufacturing activities – with one of the leading producers, Jaya Tiasa Holdings Bhd, closing operations, whilst most other companies have cut production volumes “due to the weak imported plywood prices in the Japanese market.”
In addition, Ms Satkuru said Malaysia, Indonesia, Thailand, Vietnam have emerged as important tropical secondary processed wood product (SPWP) producers, part of a push to preserve tropical forests, invest in plantations, and add value to fast-growing timber species.
She is now calling for joint ventures by consuming and producing countries to embark on industrial tree plantation projects on a share-profit basis to ensure the supply of raw materials for processing ahead of a fourfold increase in timber demand.
According to Ms Satkuru, The ITTO Strategic Action Plan 2022-2026, released in 2021, lists one of the priorities as “reducing tropical deforestation and forest degradation, enhancing forest landscape restoration and the resilience of forest ecosystems to climate change, and conserving biodiversity and ecosystem services.”
Ms Satkuru said tropical forests represent 45%, or 1.84 billion hectares, of all forests. On funding for Itto projects in member countries, she noted Itto had, for the first time in 10 years, raised more than US$7mil in 2023 from voluntary contributions, mainly from Japan, China, and the United States.
“We are now targetting non-traditional donors as it is insufficient to rely only on traditional donors for the funds; we are in talks with three potential external donors, with one expected to come to fruition in 2024.”
“We need a minimum of US $10 million a year to fund ITTO projects in Asia, Latin America and Africa. In addition, we require about US $7 million a year for the administration requirements of ITTO.”
The push comes after Ms Satkuru called on global leaders to invest in tropical timber (and forests) at the COP28 summit in Dubai.
“The centrality of tropical forests for both mitigation and adaptation cannot be overstated,” Ms Satkuru told the Summit, adding, “If we continue disincentivising forest conservation, we will never succeed in limiting the damage caused by climate change and changing land use.”
Adding that sustainably managed tropical forests and wood production is crucial nature-based solutions.
“Timber is one of the most environmentally friendly materials we have.”
“Sustainable forest harvesting is not deforestation, and the sustainable use of wood products increases global carbon storage.”
