PETALING JAYA: The timber sector, including in Malaysia, continues to struggle globally, but with signs of resilience in Europe, according to the latest market report by The International Timber Trade Organisation (ITTO).

The report noted that the Italian furniture sector managed to hold up reasonably well toward the end of 2008.

“Preliminary 2008 end (of) year figures suggest that Italian sales of wood furniture fell by 5.6% in 2008 compared to the previous year. Much of the decline in sales was due to a fall in the overall level of Italian domestic furniture consumption.

“The value of Italian wood furniture exports fell by only 2%. The likelihood is that the Italian furniture sector extended its share of the global wood furniture sector in 2008,” the report said.

On the home front, an industry player said demand for Malaysian timber was still weak. “Demand is still quite soft. It has not picked up,” he told StarBiz. He does not expect prices to rise so soon, despite recent market optimism of a recovery in the global economy.

Malaysian log prices, as reported by ITTO, were largely flat except for Peninsular Malaysia logs of Meranti wood super quality grade which rose to US$233-US$252 per sq m from US$232-US$251 previously for the two weeks ended April 15.

Prices of sawnwood, plywood and panel products in about 23 categories were down except for certain types of rubberwood, which saw flat prices.

Prices of Malaysian furniture and furniture parts in nine categories were flat in the two weeks ended April 30. Concerns on the Malaysian timber market include the threat of closure among furniture makers as furniture exports dropped 14.2% in January 2009 compared with the same month last year.

Malaysia Furniture Entrepreneurs Association president Desmond Tan also recently commented that manufacturers might have to close in six months as a result of the 50% increase in the levy for foreign workers.

Other concerns in the Malaysian timber industry include news of properties facing foreclosure or receivership rising 10% to 20% and reports of banks withdrawing credit facilities from exporters, according to ITTO.

“Many banks are reportedly to have started withdrawing trade credit facilities from a wide range of exporters, including those with low credit risk exposure in the timber sector.

“Most Malaysian banks traditionally favour the construction sector over the manufacturing and trading sectors.

“This has contributed to the large number of abandoned construction projects in Malaysia during a recession, which in turn drives down prices of building materials and timber products,” the report said.

Meanwhile, the ITTO report was positive on the appointment of Tan Sri Bernard Dompok as Plantation Industries and Commodities Minister.

“Dompok was born and brought up in the timber resource rich state of Sabah, and is familiar with many of the issues and challenges affecting the local timber industry,” it said.