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The Indian plywood industry has found alternative sources to import logs from abroad after shipments from Myanmar were stopped on April 1.
According to industry sources, plywood makers have begun to import logs from Papua New Guinea, Solomon Island, Malaysia, Vietnam, Cambodia, Liberia and Cameroon in the recent months.
“Indian plywood makers used to import logs worth 30,000 cubic metres a month from Myanmar before the ban became effective. The new sources in South-East Asia and Africa are compensating for the drop in supply of the key raw material from Myanmar,” said Prakash More, MD of Mayur Plywood.
Myanmar banned exports of logs after March 31 in an effort to save its depleting forest cover. But the ban is confined only to raw timber exports.
The Federation of Indian Plywood and Panel Industry (FIPPI) President, Sajjan Bhajanka, told BusinessLine that the available log variety in Papua New Guinea and Solomon Island is not only similar to one in Myanmar but also a bit cheaper. “On the other hand, African log, which could fit the plywood industry requirement, was lighter and generated saving in logistics cost on a comparative scale,” said Bhajanka, who is also the Chairman of Century Ply.
On an average, logs from Solomon Island and Papua New Guinea are 15-20 per cent cheaper than the Myanmar produce. Currently, they are quoting at $300-320 per cubic metre. The Okume log from Liberia and Cameroon cost $470-480 but its quality and yield is better than the one from Solomon Island or Papua New Guinea.
According to insiders, the survival strategy to avert serious supply problem landed Indian players to discover uncharted territories for procuring logs. The 1,000-units strong plywood and panel industry, according to the FIPPI estimates, clocked around ₹18,000-crore revenue during 2013-14 even as it was impacted by the housing sector slowdown.
“Some of the bigger players have set up their units for value addition in Myanmar and some more are in the process of establishing their facilities in the country for import of intermediaries (veneers). But the majority of Indian players, scouted for alternative sources of log supply in the new geographies and variants resembling similar timber qualities,” Bhajnka said.
Without compromising on quality, the new supplies resulted in marginal increase of 3 to 4 per cent cost in procurement, said More. “As logs formed 10 to 15 per cent of the plywood industry’s raw material requirement, overall cost increases could be restrained to manageable levels,” More said.
The industry depends on hard timber for top and bottom layers (face veneers) of plywood. For the core veneer, the industry now uses plantation timber.
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