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Commodities

Japan-bound Indonesian plywood price to rise 4% in June

Expected increase in Malaysian logging tax having an effect

Concrete forming plywood is used in the process of laying the foundations of buildings.

TOKYO -- Japan has agreed to a 4% rise in prices for Indonesian plywood to be delivered in June. 

The price hike for concrete forming plywood, used in building foundations, takes place ahead of an anticipated increase in the logging tax in rival supplier Malaysia, Japan's largest source of plywood. The rise is the first in about a year.

The benchmark 12mm concrete form prefinished plywood price for June shipment was set at $520 per cubic meter under a cost-and-freight contract, up $20 on the month.

Indonesia's plywood manufacturers had demanded a $20-25 increase, 4-5% higher than in May.

Indonesia is Japan's second-largest supplier of tropical timber, after Malaysia. The two countries supply more than 70% of Japan's plywood imports. Total plywood imports to Japan in 2016 rose 5.2% from a year earlier to 903,336 cu. meters, of which shipments from Indonesia accounted for 32.6% of the total, while those from Malaysia made up 38.8%.

Japan agreed to Indonesia's request for a price hike, anticipating higher demand for Indonesian form plywood as a substitute for Malaysian products after the latter announced it will raise its timber harvesting tax in July .

Japan's mostly large buyers agreed to grant nearly the full value of the requested price hike.

Prices for Japan-bound plywood from Malaysia have already been rising due to the increase in the tax rate. The higher price for Indonesian plywood may push construction costs up in Japan. 

(Nikkei)

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