Malaysia has continued to report declining volumes in both timber harvesting and primary processing industries’ production in July 2025.

This is because the market demand for the country’s timber sector remained weak, according to Global Timber Index (GTI) – Producers Report.

“In July 2025, the GTI-Malaysia index registered 29.6 per cent, an increase of 6.2 percentage points from the previous month, was below the critical value (50%) for many months, indicating that the business prosperity of the superior timber enterprises represented by the GTI-Malaysia index shrank from last month.

“As for the twelve sub-indexes, the index for purchase price was at the critical value of 50 per cent while the remaining eleven indexes — harvesting, production, new orders, export orders, existing orders, inventory of finished products, purchase quantity, inventory of main raw materials, employees, delivery time, and market expectation — were all below the critical value.

“Compared to the previous month (June), the indexes for new orders, export orders, employees, and market expectation increased by 2.8-9.1 percentage points; the index for harvesting was unchanged from the previous month; and the indexes for production, existing orders, inventory of finished products, purchase quantity, purchase price, inventory of main raw materials, and delivery time declined by 2.2-15.3 percentage points,” added the latest monthly report prepared by Global Green Supply Chains Initiative (CGSC) in collaboration with International Tropical Timber Organisation (ITTO).

In July, Malaysian timber enterprises had reported numerous challenges, the keys included demand for timber products was low and there was a shortage of plywood demand for export, ocean freight rates started to increase again (especially to the United States of America) and labour cost had gone up.

They were also faced with shortage of logs as the supply depends on weather condition. The payment credit term of up to between 30 and 90 days posed challenges to them.

To mitigate these challenges, they suggested to slow down production and wait for market rebound. They suggested more advertising and promotions for timber products, and urged the government to stimulate more usage of sawnwood in the construction industry.

On the reduction of US tariffs on Malaysian goods from 25 per cent to 19 per cent, the report said this might help to stabilise Malaysian furniture exports to US.

Before the tariff cut, the Malaysian Furniture Council had said that due to the 25 per cent tariff, many of its member companies had encountered order cancellations, with buyers sourcing from other countries.

On the EU Deforestation Regularisation (EDUR) which has classified Malaysia in the category of “standard risk,” the report said Malaysia has set up a special committee, involving three ministries, in its efforts to move the classification to “low risk” from “standard risk”. These are the Ministry of Plantation and Commodities, Ministry of Natural Resources and Environmental Sustainability and Ministry of Investment, Trade and Industry.

“The special committee will strengthen national traceability systems and ensure the provision of credible forest data to the Global Forest Resources Assessment (FRA) by the Food and Agriculture Organisation of the United Nations (FAO).

“Besides, this committee on EUDR is examining how countries, like Thailand, attained low-risk classification so as to identify the differences and work on improving them,” added the report.

Overall for the eight pilot countries, the GTI-Producers Report said in July, it registered 49.1 per cent and stayed below the critical value for several consecutive months. This indicated a downturn for the overall prosperity of the timber harvesting and primary processing industries in the pilot producing countries.

Among the countries, Brazil’s timber sector showed signs of recovery; Ghana and Thailand continued their upward trend while the GTI comprehensive indexes for other countries were still in contraction terrority. The pilot countries also include Indonesia, Gabon, Republic of Congo (ROC) and Mexico.

In Asia, the GTI for Thailand registered 53.4 per cent, marking the second consecutive month in positive terrority. Like Malaysia, Thailand also reported insufficient supply of raw material for the processing industry.

“In Thailand, despite disruptions from heavy rains and other factors, its harvesting volume rose for the second consecutive month, and production volume maintained upward trend for the second consecutive month. However, its inventory of main raw materials was still shrinking, also representing a slide that had persisted for several months,” said the report.

In Africa, the GTIs for Ghana, Gabon and ROC stood at 75.8 per cent, 45.4 per cent and 42.4 per cent respectively. Ghana’s timber sector had remained in expansion terrority for seven consecutive months while ROC and Gabon remained in contraction.

On the supply side, Ghana’s harvesting and production continued to show significant growth. However, GTI sample enterprises in the country reported high costs for raw materials, especially logs and adhesives, and the GTI data also showed that the purchase prices of Ghana’s main raw materials had been rising for several consecutive months, indicating mounting cost pressures for the country’s timber producers.

“In Gabon and ROC, the harvesting volume turned from growth to a downward trend this month, and historical data for the past six months suggests harvesting activities remained predominantly contractionary in both countries. Besides, production volumes in both countries also fell this month.

“On the demand side, the volume of new orders for Ghana continued to increase steadily while for enterprises in Gabon and ROC, the market was still shrinking.”

In Latin America, the GTIs for Brazil and Mexico recorded 50.8 per cent and 36.7 per cent respectively for July.

Brazil returned to the expansion terrority after staying in the doldrums for six months while Mexico remained in contraction terrority for the second consecutive month.

For the month under review, Brazil’s harvesting volume fell sharply from the previous month, and production volume also declined. Since October 2024, supply side in Brazil had remained relatively weak.

In Mexico, harvesting volume decreased slightly after four months of growth, and production declined for the second consecutive months.

On the demand side, trends differed: Brazil’s timber sector saw an overall increase in new orders in July, mainly driven by a significant recovery of domestic demand while Mexico’s export market held steady but its domestic market was weak.

Source: sarawaktribune.com