Lumber in RP to cost more next quarter

Source: IPBee2000 – Philippine Real Estate News

 

WOOD MANUFACTURERS are eyeing a 15%-20% increase in retail prices of lumber, plywood and other wood products by next quarter, the Philippine Wood Producers Association (PWPA) said Tuesday.

 

The price increase is intended to cover rising cost of production inputs like logs, fuel and glue, PWPA president Antonio C. Olizon said in an interview.

Competing demand from economies like China and South Korea had jacked up the prices of imported logs, Mr. Olizon noted, though he could not cite specific figures.

"Also, glue prices rose 10%-15%," he added.

Common construction lumber currently costs P44-P46 while 5-millimeter plywood measuring four by eight feet costs about P300, Mr. Olizon said. The said price hike will mean lumber will cost P6-P9 more, while plywood prices may see increases of P45-P60.

Retail prices of construction materials in Metro Manila had risen 7.1% last April, data from the National Statistics Office show.

Fears

The group now fears that the impending price hike for wood products will dampen consumption, as buyers may choose substitutes such as cork, plaster-boards and other synthetic goods.

Already, PWPA observed that domestic demand for wood products waned in May and June as construction groups put off or scaled down projects.

Exports of Philippine wood to the United States and Japan also declined in the first half as their economies weakened and the peso strengthened, Mr. Olizon said.

"I know of one Philippine mahogany exporter who saw a 50% decrease in exports [in the first half]," he said.

For 2009, wood producers hope to increase production and export sales, but are hesitant to do so unless there is long-term stability in the policy on logging, Mr. Olizon said.

"We need better guarantees that we will harvest what we plant," he explained.

Leonardo D. Angeles, executive director and board secretary of PWPA, cited red tape as a premier constraint to business. "It takes a long time for them to identify areas [we can plant on]and government offices take too long to process licenses," he said.

This, he said, makes producers unable to attract buyers because the supply chain is disrupted.

"There is no appreciation from the administration of the importance of our industry," he added.

PWPA also noted that their members are preparing for the possible lowering of tarrifs on imported wood products by re-tooling plants and exploring innovative wood products to become more competitive.

Data from the National Statistical Coordination Board show that wood and cork products composed less than 1%, at P749 billion, of the P88.658-trillion gross value added to the manufacturing industry at the end of 2007.