The budget for 2013-14, presented by the Finance Minister Mr.P.Chidambaram, has not increased import duties on wood in the rough, sawn timber, plywood and other panel products. The good news in the budget for the timber industry is that it provides support for home buyers. This should give a boost to the housing sector which is a significant market for wood products. The assessment of analysts is that the budget is well balanced and will stimulate investment.

Timber Processing Zone experiment a success
To prevent illegally felled domestic logs entering the supply chain all wood working industries are required to obtain clearance from a ‘Central Empowered Committee’, whose task is to verify the source of the logs.
This is a time consuming and costly process for the timber industry and discourages new investment in wood based enterprises. To ease the burden on industry and minimize the bureaucracy, an experiment has been launched. A Timber Processing Zone has been created where enterprises can be established to process only imported logs, sawnwood and veneers.

The first such processing zone was developed in Kandla, home to a major port servicing the timber industry on the west coast of India in the state of Gujarat. The procedures for establishing a wood processing plant in the Zone have been made easy to encourage companies to invest in processing capacity. The indications are that this experiment proved a success as about 1,000 factories of various types and sizes have been established in and around the Zone.

The technical and marketing advantages of such a cluster of wood processing industries are now being felt and employment opportunities have expanded. Given the positive experience in Kandla, Paradeep Port on the east coast of India in Odisha state has been selected for establishment of a second Timber Processing Zone. The government of Odisha has identified land for this project and construction planning is underway.

IKEA investment in retailing outlets likely to get approval
The Swedish company IKEA has submitted a proposal to the Indian authorities for investment in retail sales outlets across India for its home and office furnishing products. Media reports indicate that the Foreign Investment Promotion Board has recommended IKEA’s proposal to the Cabinet Committee of Economic Affaires. India’s foreign investment rules require a mandatory sourcing of at least 30% of the value of goods sold in India from domestic small and medium enterprises. When the IKEA investment goes ahead it could boost sales of locally manufactured panel products, hardwood products and handicrafts.

Strong demand for imported teak despite quality issues
The availability of imported teak and other hardwoods has improved since the beginning of the year and this has meant companies have been able to maintain healthy stock levels. However, analysts say hardwoods from domestic forests are preferred by industry as the quality is better. Teak and other hardwood logs from Myanmar are of larger girth than imported plantation teak logs but the availability of high quality teak from Myanmar is said to be declining. However, due to the scarcity of domestic teak logs even poor quality logs from Myanmar are purchased immediately on arrival at Indian ports.

Only option - switch to SE Asian hardwood alternatives
In the absence of large quantities of Haldu (Adina cordifolia), Laurel (Terminalia tomentosa), Sal (Shorea robusta),Bija (Pterocarpus marsupium) end-users have been switching to Balau, Rengas, Meranti, Merbau and Kempas from South East Asia. There is a firm demand for these timbers in India. Imports of Radiata pine help meet the shortage of local species for production of boxes and crates, pallets and for concrete shuttering. The flow of Radiata shipments from New Zealand is steady and prices are stable.

Active trade in imported plantation teak
Supplies and shipments of imported plantation teak logs and squares are steady and prices remain unchanged. The trade in imported timber is very active due to the shortage of local hardwoods. Prices C & F Indian ports, per cubic metre are shown below.

Imported Plantation Teak Prices (C&F)

Variations exist based on lengths and average girths of logs in a parcel. Prices also vary with measurement allowances given for bark and sap in different countries of origin.

Domestic sawnwood prices
Prices for air dried sawnwood remain unchanged. Prices are shown below as per cubic foot, ex-sawmill.

Domestic Ex-mill Sawnwood Prices for Imported Timber

Prices for Myanmar Teak sawn in India

The price range is the result of variations in length and cross section.

Prices for imported kiln dry (12% mc) sawnwood
Prices remain unchanged.

Plywood manufactures undeterred by Chinese plywood imports
The level of taxes and stamp duty on newly built homes continues to deter prospective home buyers and this affects the timber sector, especially plywood and other woodbased panel manufacturers.
Imports of plywood from China continue but as the quality is perceived as low such imports are not seriously affecting sales of domestically made plywood.
Current market prices are shown below.

WBP Marine grade from domestic mills

Domestic Ex-warehouse Prices for Locally Manufactured Plywood