Tight log supply and soaring prices – plywood production impacted Indonesia’s plywood industry experienced a sharp decline in early 2026 as a result of tight log supply and rising log prices.

The Indonesian Wood Panel Association (Apkindo) reported that roundwood production from natural forests in the first quarter fell by around 30% year-on-year. This decline affected all major production regions, with Sumatra recording the steepest drop, followed by Kalimantan, Java-Bali and Eastern Indonesia. Apkindo said the reduction in supply was partly caused by the revocation of several forest concession permits, which reduced raw material availability for processing industries. At the same time log prices continued to climb. Meranti log prices rose to around Rp2.5 million–Rp2.6 million per cubic metre while prices in Java reached Rp3.8 million– Rp4 million per cubic metre. Apkindo said the combination of limited supply and rising prices was reflected in plywood production figures, with national output in March 2026 falling to approximately 158,000 cubic metres, down 31% from February and around 40% lower than the same month last year. Overall production in the first quarter 2026 declined by about 30% year-onyear. The industry’s challenges have been compounded by soaring energy costs. Since early March 2026 industrial fuel prices reportedly surged by around 100% due to global energy supply disruptions linked to geopolitical tensions in the Middle East. The higher fuel costs have affected logging operations, transportation, factory activities and supporting materials such as adhesives, while international shipping costs have also become increasingly volatile. Apkindo warned that manufacturers now face a difficult dilemma as rising production costs are forcing companies to consider higher selling prices even as global demand weakens, threatening the competitiveness and profitability of Indonesian plywood exports.