The Triumphant Return of Apitong
After a recent surge in the popularity of a variety of South American species such as Angelim Pedra / Para Angelim and Purpleheart as cheap and readily available material for use in a variety of applications for the the truck trailer market, it appears that Apitong is again poised to make its triumphant return to the dominant position in the trailer market!
With the commodity boom of the past five years, the Brazilian currency, the Real, has strengthened substantially against the US dollar. The dollar, compared to Brazilian currency, has almost halved in value since 2004. Meanwhile, the Euro's continued surge against the dollar has allowed European buyers to have increased purchasing power and has also coincided with the European market's fuller embrace of the use of South American tropical hardwoods. Today we are seeing more and more South American product going to Europe -and to Japan, China and elsewhere - and less being sold to North America.
The chart below clearly shows the the devaluation of the US Dollar vs. the Brazilian Real over the past 12 months.
The Malaysian currency, the Ringgit has remained relatively stable over the last 10 years. Two economic downturns in the past six years have severely dented gross fixed investment. The reduction has been caused by lower foreign direct investment (FDI) and lower private domestic investment. Fearing that a sustained level of lower investment will eventually lead to slower economic growth, the Malaysian government introduced measures to stimulate private domestic investment in the 2003 budget.
At the same time as prices have been escalating on products from South America, we have also seen diminished available supply. Major producing nations such as Brazil, Peru and Bolivia have sharply reduced government approval for new timber extraction projects. Furthermore, a major national crackdown on forest management practices of privately held lands in Brazil (coincidentally the largest exporter of Tropical Hardwood Products in South America) has frozen a large portion of forested land that was previously approved for logging.
Faced with the above situation, many are beginning to again examine the value offered by the recent upstarts Parangelim and Purpleheart. Prices have increased dramatically and supply is now extremely tight and unreliable. In light of the circumstances, many experienced and globally savvy buyers are again returning to the value and reliability of Apitong.
Over the last decade, Apitong supply and pricing has remained extremely stable. This has much to do both with currency exchange issues and forest management practices in the main producer countries of Malaysia and Indonesia.
Because the Ringgit had been strong in the past, ordinary market intervention by the Malaysian Central Bank was limited to smoothing fluctuations. Today however, the Malaysian Central Bank is much more concerned to hold the exchange rates down (and thus promote both exports and foreign direct investment) rather than to support the local currency.
Since the US Dollar vs. Malaysian Ringgit has remained extremely stable during the past several years, pricing for Apitong has also remained relatively unchanged and has reacted primarily in relation only to more basic seasonal supply and demand factors. See chart below:
On the supply side in both Malaysia and Indonesia, buyers have found a suitable measure of reliability and responsibility in the areas of tropical forest management and resource-based economic development. Tropical forests in both countries are essentially public lands, managed and protected by their respective Federal and State Governments.
Forest Certification programs have emerged in both Malaysia (through the FSC and the MTCC) and Indonesia (through the FSC and LEI). Certification is very much market driven and is serving as a tool towards promoting legal, reliable and sustainable forest management. Certification is seen as a step toward ensuring the production of a continuous flow of desired forest products and services from the forest reserves. Further, certification is being actively pursued to ensure continued market access of Malaysian and Indonesian timber products, particularly in an increasingly environmentally sensitive market.
With the governments and policy makers in Malaysia and Indonesia having made the decision to promote a more stable currency policy and with the added impetus of emerging Forest Certification Schemes offering a legal, reliable and sustainable supply situation, we feel that Apitong has again made its triumphant return to the dominant position in the trailer market!
We at Nova USA Wood Products and TrailerDecking.com offer a wide variety of Apitong products for the trailer and truck body industry. We purchase only the best materials from reputable mills that place an emphasis on quality and delivery. We are also one of the few suppliers who have overseas inspectors in place to ensure that material is thoroughly checked before it departs the mill. This final inspection ensures that you get exactly what you ordered each and every time. We certify all of our trailer decking products and warranty them against defects in workmanship. Contact us for a quote today.