Indonesia: Sengon used as alternative to raw materials from production forests

ITTO's Tropical Timber Market Report
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Timber products manufacturers in Java are increasingly turning to sengon wood as an alternative raw material, reported The Jakarta Post. As a result, its price has quadrupled to Rp 800,000 (USD79) per m³ over the last four years. Sengon wood is preferred by many manufacturers as the tree is highly adaptable to most soil conditions and has a 5 to 10 year gestation period. The physical properties of the wood also meet the requirements of manufacturers for a wide range of timber products. With some companies utilizing up to 80% of sengon wood as raw material, competition for the wood has become keen. Prices of the wood of a higher quality are anticipated to hit Rp. 1 million per m³. As such, some companies have resorted to buying other lesser-used species such as coconut and oil palms as a source of raw material. However, sengon wood remains a favorite among timber products manufacturers in Java which are reported to have processed and used up to 4 million m³ of the wood over the last three years.

New certification system to take effect in September
The Jakarta Post reported that by 1 September 2009, a new certification system would be in place for the country’s log and wood products produced by local companies. The Institute of Independent Evaluators and Verifiers (LPVI) will be responsible for issuing certificates for these products as well as standardization documents to licensed holders of forest management units, production forests and community forests. The system will apply to Indonesian products sold domestically and internationally. Until now, the Board for the Revitalizing the Forest Industry (BRIK) has been in charge of issuing certification documents for exported products and will continue to do so until LPVI is ready to take over BRIK’s responsibilities. Unlike BRIK, LPVI will comprise more non-governmental, independent and professional experts.

Ministries wrangle over rattan quotas
Uncertainty continues to prevail over quotas imposed on rattan exports involving the Indonesian Trade Ministry and the Industry Ministry, reported The Jakarta Post. The quotas imposed under a new regulation, which constitutes the fourth revision of a 2005 regulation, have remained unchanged despite mounting calls to reduce or completely ban rattan exports in order to address the acute shortage of the raw material. However, Industry Minister Mr. Fahmi Idris indicated that the quotas could be amended as the new regulation was still undergoing further revision.

The Industry Ministry reveals that the country produces 600,000 tons of raw rattan annually, which represents 75% to 80% of the world’s total production. Sumatra, Kalimantan, Sulawesi and Papua are the main rattanproducing regions in Indonesia. The Indonesian Furniture Entrepreneurs Association (Asmindo) said the local annual demand for the commodity amounts to 300,000 tons.

The Industry Ministry and Asmindo, which represents rattan producers and craftsmen, have called on the Trade Ministry to curtail raw rattan exports further, while the Indonesian Rattan Furniture and Craft Association (AMKRI) is demanding that the Trade Ministry should cease issuing export permits for the commodity. AMKRI Chairman Hatta Sinatra commented that the country might not be able to meet local demand, estimated at up to USD300 million, if the government did not curtail exports of rattan.

Indonesia Log Prices
Indonesia Log Prices
Indonesia logs, domestic prices US$ per m³
Plywood logs Face Logs 187-229
Core logs 169-202
Sawlogs (Meranti)
Falcata logs
Mahoni (plantation mahogany)

Indonesia Sawnwood Prices
Indonesia, construction material, domestic US$ per m³
Kampar (Ex-mill) AD 3x12-15x400cm 170-189
KD 193-227
AD 3x20x400cm 217-240
KD 221-248
Keruing (Ex-mill) AD 3x12-15x400cm 233-247
AD 2x20x400cm 219-237
AD 3x30x400cm 199-218

Indonesia Plywood Prices
Indonesia ply MR BB/CC, FOB
US$ per m³
MR Plywood (Jakarta), domestic

Other Indonesia Panel Prices
Indonesia, Other Panels, FOB
US$ per m³
Particleboard Export 9-18mm 215-226
Domestic 9mm 192-204
12-15mm 183-194
18mm 173-185
MDF Export 12-18mm 250-263
Domestic 12-18mm 232-243

Indonesia Added Value Product Prices
Indonesia, Mouldings, FOB
US$ per m³
Laminated Boards Falcata wood 299-311
Red Meranti Mouldings 11x68/92mm x 7ft up

Grade A 487-521
Grade B 442-463
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