Japan Wood Products
Prices
Dollar Exchange Rates of
21th February 2013
Japan Yen
93.41
Reports From Japan
Economic outlook from the Bank of Japan
The Bank of Japan (BoJ) Monetary Policy Board met in mid February and
released its assessment of the Japanese economy. The BoJ report can be found
at: http://www.boj.or.jp/en/mopo/gp_2013/gp1302b.pdf. The following is a
summary of the main features of the report.
It is the view of the BoJ that Japan's economy appears to have stopped
weakening. However, the economies in the main countries with which Japan
trades, except China, remain weak but are showing signs of bottoming out,
says the report. While Japan’s exports continue to fall the pace of decline
has been easing recently. Private sector fixed investment remains weak but
investment by the non manufacturing sector is encouraging, says the BoJ.
Public investment continues to increase and housing starts have improved and
this, along with the steady pace of private consumption, is fuelling
optimism that perhaps the worst of the economic stagnation is over.
In the words of the BoJ: “reflecting on these developments in demand both at
home and abroad, industrial production appears to have stopped decreasing”.
Japan's economy, says the BoJ report, is expected to level off and remain
stable, eventually returning to a moderate recovery path as domestic demand
improves due to the effects of various economic measures and as overseas
economies begin to show positive signs of growth.
When overseas demand begins to strengthen Japan’s export performance will
start to improve. In the short-term it will be domestic demand and public
investment that supports the economy. Business investment, says the BoJ is
projected to remain weak especially in the manufacturing sector.
Energy imports drive up trade deficit
The weaker yen has adversely affected Japan’s trade deficit which rose to a
record US$17 billion in January 2013. The rise was not wholly unexpected as
the weaker yen had a big impact on import bills plus the fact that January
is, traditionally, a slow month for exports.
The impact of the weaker currency was most apparent for energy imports which
have soared since the shutdown of almost all the nuclear reactors in the
country. Power generation is now almost entirely dependant on oil and gas,
both of which have to be imported. Recent data shows that imports of natural
gas increased by around 12% and oil imports were up over 30%.
Japan’s export performance in January was encouraging, growing 6.5% from
levels in 2012; however this was the first increase in eight months. This
good news was tempered however by the 7% plus rise in the cost of imports.
Many observers expect the Japanese government to push to restart some
nuclear reactors to cushion the impact of the weaker yen on energy import
bills.
Weak yen, unexpected consequences for Japanese manufacturers overseas
The Trade and Industry Ministry is forecasting trade with China, the number
one trading partner, should recover this year. In 2012 trade levels between
the two neighbours fell for the first time in three years because of a
territorial dispute and the slowdown in the Chinese economy.
The weaker yen also affected the trade deficit with China because Japan
imports so much from the country. Much of the imports from China are of
goods manufactured there by Japanese companies which fled Japan during the
time the yen was so strong.
Because the yen has weakened, this ‘escape’ has the unexpected consequence
of making imports from Japanese manufacturers located in China more
expensive on the Japanese domestic market.
Trade news from the Japan Lumber Reports (JLR)
The Japan Lumber Reports (JLR), a subscription trade journal published every
two weeks in English, is generously allowing the ITTO Tropical Timber Market
Report to extract and reproduce news on the Japanese market.
Extracted from the Japan Lumber Reports:
Plywood supply in 2012
Imported South Sea plywood
South Sea logs
Plywood supply in 2012
Total plywood supply in 2012 was 6,074,400 cbms, 1.2% less than 2011 but
total supply exceeded 6 million cbms for two straight years.
The market weakened since November 2011 by aftermath of heavy supply for
restoration of earthquake and tsunami damage in March 2011 so that domestic
softwood plywood manufacturers started production curtailment since mid 2012
to restore the market.
Meantime, the shipment remained rather high so that the production recovered
in the second half of 2012.With bullish demand, imported plywood showed
steady supply with share of import being 58% in 2012.
Total imported plywood was 3,525,900 cbms, 3.7% less than 2011 while
domestic supply was 2,548,500 cbms, 2.5% more.
Overseas plywood suppliers have always demanded high prices but they have
kept small price increase considering deflation in Japan so the buyers in
Japan could keep buying.
Domestic softwood plywood production was 2,327,400 cbms, 5.9% more than
2011. The market had kept weak almost through 2012 due to heavy inventories
but the shipments have kept high level since last April and the shipments
recorded over 210 M cbms a month for three consecutive months since last
October, supported by aggressive purchase by house builders and precutting
plants.
The manufacturers increased the production to cope with active demand and
the production has kept over 200 M cbms for three consecutive months since
last October. With the shipment surpassing the production, the inventories
have kept dropping.
Imported South Sea plywood
Prices of Japanese market and the suppliers’ proposals are firming. In
particular, prices of concrete forming panel are sharply climbing in Japan.
Prices of 3x6 concrete forming and concrete forming panel for coating
increased by 120 yen per sheet due to ongoing depreciation of the yen.
The prices in Japan went up since late January because of considerable
depreciation of the yen and future contract prices with the suppliers are
much higher than current
market prices. This causes speculative purchase supported by brisk demand
and delayed shipment caused supply shortage.
Exchange rate of the yen dropped by 16% since mid November from 79 yen to 94
yen. 3x6 JAS concrete forming panel prices in mid November were 860-870 yen
per sheet delivered but now they are 1,020 yen, 18% up. Prices of 3x6
concrete forming for coating are 1,150-1,160 yen, 100-130 yen higher than
January. 12 mm structural panel prices are 1,020-1,050 yen, 70-100 yen
higher than January.
Both floor base and standard panel are firm. Bullish floor manufacturers
placed large orders but dollar based prices makes yen prices much higher due
to rapid depreciation of the yen and floor manufacturers are not able to
absorb cost increase.
Suppliers’ prices on 12 mm x 945mm x 1,840 mm are in last December were $670
per cbm C&F, $20 up.
The prices in Japan now are 1,280 yen per sheet delivered, 20 yen up from
January. Thin panel prices of 2.4 mm are 370-380 yen per sheet (type 2/F 4
star). 3.7 mm are
about 480 yen (type one/Ｆ☆☆☆☆). 5.2 mm are about 590 yen (same as 3.7
mm).Both are 10-20 yen up from January.
South Sea logs
Log market in Japan has been firming since last month due to cost up by weak
yen and the suppliers’ offer prices are also firming.
Current market prices in Japan are about 8,200 yen per koku CIF on Sarawak
meranti regular, 400 yen higher than January. January arrived Sabah kapur
regular log prices are about 12,200 yen. Log prices have to go higher yet
which squeezes plywood mills’ profitability severely.
Mills are asking 10% higher prices on plywood but further hike is necessary.
Log producing regions are in rainy season. Sabah weather is particularly
poor. Log production is down everywhere. Log prices are firm and inching up
while demand in China is not so active and India buys necessary volume only
as they are making,
inventory adjustment in India so there is no panic buying in limited supply.
Log inventories are way down in Malaysia and some plywood mill in Sarawak
shut down because of shortage of logs.
Japanese buyers want to reduce FOB log prices to offset weak yen but on the
contrary, log suppliers’ offers are about $5 up. India does not chase higher
log prices.
Sarawak meranti regular prices are $255-260 per cbm FOB. Meranti small
prices are $215-220 and super small are $195-200. Ocean freight is up by $1
per cbm since January, which pushes CIF cost up higher.
|
