Japan
Wood Products Prices
Dollar Exchange Rates of 25th
February
2021
Japan Yen 106.56
Reports From Japan
Rising exports lift growth
Japan¡¯s GDP rose in the third quarter of 2020 by over 3%
according the Cabinet Office, this was much better than
expected.
This positive growth helped drive down the losses for the
year as a whole and resulted in a 2020 contraction of
4.8%, less than the minus 5.7% projected. Better than
expected international trade and some improvement in
household spending lifted growth.
Japan's exports accelerated in December led by a jump in
Chinese demand. Ministry of Finance data showed that
exports rose 6.4% last month from a year earlier. The
fourth quarter 2020 also saw businesses increasing
investment.
The Minister of Economy pointed out that consumer
spending remains below average and exports could be
impacted if the new strains of the corona virus cause
governments in the main overseas markets to introduce
more restrictions.
Machinery orders set to decline
Private-sector machinery orders(an indiacation of industry
sentiment) excluding those by ship builders and power
companies increased by around 5% in December and were
up by over 14% year on year in the last quarter of 2020.
Forecasts by Cabinet Office analysts suggest in the first
quarter of this year the value of machinery orders is likely
to decline.
Outlook for economy less certain
In its February report the Cabinet Office downgraded its
assessment of the economy for the first time in 10 months
saying it is showing ¡°weakness in some components¡± as
consumption is slowing because of the ongoing state of
emergency.
For January the report declared the economy was ¡°still in a
severe situation¡± but showing signs of picking up.
Consumer spending is a key indicator and this was
revised
downward for the third consecutive month. A surge of
infections after the New Year holidays led the government
to declare a state of emergency last month covering the
Tokyo metropolitan area, Osaka, Aichi and other hard-hit
prefectures.
This had a huge impact on spending as people cut
back on
activities. However, spending on goods such as cars, home
appliances and furniture were higher than expected.
Yen direction hinges on dollar trend
The Japanese Yen has weakened against the US Dollar in
recent weeks after a strong performance against the US
dollar in the 12 months to January 2021. This weakening
appears to be the result of rising yields on US Treasuries
which has been buoyed by prospects of rising inflation on
the back of the US fiscal stimulus plans and progress in
vaccinations across the US.
The US dollar gained strength from comments by the US
Federal Reserve after it reiterated interest rates will remain
at near-zero levels and it will continue its asset purchases
at the current rate until ¡°substantial further progress¡± has
been made toward its goals of maximum employment and
price stability.
March 2011 tsunami anniversary approaches ¨C
many
familes still without a home
After waiting a decade most of the families left without a
home after the March 2011 Great East Japan Earthquake
and tsunami can finally move into the Minami-Aoyama
apartment complex, the last built for victims of the
earthquake. The public housing complex opened on 11
February for new residents.
Replacement home construction started in only 2016 and
work on the Minami-Aoyama apartment complex started
in 2017. A decade has passed since the 2011 disaster, a
long time to wait for a home. Around 30,000 public
housing apartments for disaster victims in eight
prefectures have been completed.
Construction activity likely to be subdued for some
time
The Japan Cement Association has reported sales of
cement in Japan fell to a 54-year low in 2020 as the
coronavirus control measures caused delays to
construction work. The Association has warned the low
number of new construction projects means the business
climate for cement producers and timber suppliers is likely
to remain difficult for some time.
Year on year, housing starts in January 2021 were down
13% and compared to a month earlier January starts
dropped 12%.
Furniture import snapshot
Three year performance
Japan¡¯s wooden furniture imports (HS940330-60) rose
around 2% year on year in 2019 but then fell back in 2020
dropping 3.5%. Given the drop in consumer spending and
in the consumer confidence index in 2020 a 3.5% decline
in the year of the pandemic seems a good performance.
2020 imports of wooden office, kitchen and
bedroom
furniture
The value of both wooden kitchen and bedroom furniture
(HS9403/40 and 50) imports fell steeply in the first half of
2020 as the corona control measure impacted consumer
spending and, to a lesser extent, the building of new
homes.
However, the down turn was reversed in the second half of
2020 when there was a surge of 20% in imports of wooden
kitchen furniture. Imports of wooden bedroom furniture in
the second half of 2020 recovered and stabilised.
2019 and 2020 office furniture imports (HS
940330)
In 2020 Japan¡¯s imports of wooden office furniture fell 8%
compared to a year earlier. In 2020 Chna was the main
source of imports and accounted for 66% of all wooden
office funiture imports, the same percentage as in 2019.
Other main shippers in 2020 were Poland (6%), Italy
(3%), Vietnam (2%, double that in 2019) and Taiwan PoC
(2%). See table below.
2019 and 2020 kitchen furniture imports (HS
940340)
There was an 11% decline in the value of Japan¡¯s 2020
imports of wooden kichen furniture compared to a year
earlier.
The Philippines and Vietnam were the main suppliers
accounting for over 80% of the total value of Japan¡¯s
imports of wooden kitchen furniture. In 2020, shipments
from the Philippines were around 6% less than in 2019.
See table below.
Bedroom furniture imports (HS 940350)
In sharp contrast to the declining level of office and kichen
furniture in 2020 compared to a year earlier the value of
Japan¡¯s wooden bedroom furniture imports in 2020 rose
16% year on year.
Imports from the two main shippers, China and Vietnam
rose and these two accounted for almost 90% of Japan¡¯s
wooden bedroom furniture imports in 2020. The other
shippers in the top five suppliers were Malaysia (3.5%),
Indonesia (1%) and Poland (1%).
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 reproduce news on the Japanese market
precisely as it appears in the JLR.
For the JLR report please see:
https://jfpj.jp/japan_lumber_reports/
Increasing cedar log export for China
Cedar log export during January and October last year is
955,749 cbms, 26.0% more than the same period of 2019.
After China stopped buying Australian logs and declining
supply of Russian logs, log inventory in China had been
decreasing and Japanese cedar log inventory in Shanghai
at the end of 2020 is only 60% of normal level.
Normally log import gets slower about two months around
Chinese New Year (February 12 this year) but because of
low level of log inventory, active purchase continues even
in January. Export prices are US$135- 140 per cbm C&F,
US$15-20 higher than January 2020. Log prices seem to
go higher after the New Year holidays.
Cedar log prices in loading ports are climbing. The prices
of 8 centimeter up log prices were about 7,500 yen per
cbm delivered ports until last October then the prices
inflated to 9,000-10,000 yen by late December.
18 cm up logs to manufacture cedar fence for the U.S.
market are 10,000-11,000 yen but because of container
shortage, freight is climbing by US$15 per cbm, which
hold log prices down. Higher C&F prices are offset by
higher container freight.
With increasing housing starts in the U.S.A., demand for
fence materials is increasing, which is one major reason of
active purchase of cedar logs by China but 25% duty is
imposed to the Chinese made products.
Meantime, cedar fence materials export to the U.S.A. by
the Japanese manufacturers has been increasing. Export
volume for the first ten months last year was 39,662 cbms,
87.6% more than 2019. Export prices of fence materials
are US$440-450 per cbm C&F, US$40-50 up but because
of higher freight, sawmills¡¯ revenue does not increase.
In the first half of 2020, volume of softwood logs imported
by China was 17,640 M cbm, 16.2% less than 2019 due to
corona epidemic but the second half is recovering.
Japanese cedar log export for China would be reaching
one million cbms and log export for Taiwan PoC and
Korea is also increasing so total in 2020 should be the
highest in record.
Plywood supply in December and 2020
December plywood supply wass 448,100 cbms, 9.6% less
than December of 2019 and 4.8% more than November.
Production of domestic plywood surpassed 270,000 cbms
for two straight months, which balance out monthly
shipment volume.
December end inventory is 100,900 cbms, 5,000 cbms
more than end of November. The manufacturers¡¯
production is slower because of cold temperature, which
reduce efficiency of drying. Meantime, the shipment is
steady so January end inventory should drop again.
On imported plywood, Malaysian supply increased but
Indonesian supply decreased. In producing regions, log
production is largely declined due to labor shortage by
corona virus outbreak so low level import would continue.
Total plywood supply in 2020 is 5,207,700 cbms, 11.1%
less than 2019. This is the lowest in last ten years.
Imported plywood is 2,215,000 cbms, 12.6% less, more
than 10% decrease for two consecutive months.
Domestic production is 2,992,700 cbms, 10.0% less, first
time after five years that the volume dropped less than 3
million cbms.
Movement of domestic softwood plywood is pausing with
tight supply feeling continuing. Dealers have ample
inventory now so the inquiries are simmering down.
Precutting companies have ample orders for February
so
the demand is not so weak. There are still delayed
deliveries in the Western Japan.
Plywood mills are running with normal pace since last
month but drying veneer takes more time in winter by low
temperature so total production is lower than normal. Also
by heavy snow fall, transportation is confusing.
Plywood mills try to push the prices further up but major
precutting plants are cautious as demand slow period of
early spring is approaching and price hike of other
materials like structural laminated lumber. Import
plywood continues tightness with port inventories
vanishing so the dealers struggle to secure the volume.
In South East Asian countries, log supply shortage is
caused by poor weather and labor shortage so plywood
mills are not able to accept new orders. If the importers
place new orders, the prices are way higher than Japan
market prices and the importers are
aware of obvious loss if they place new orders so supply
increase is impossible.
Share of domestic is 57.5%, 0.8 point up
Imported plywood volume decreased because of depressed
tropical hardwood plywood market in Japan and corona
virus outbreak in 2020 so the importers reduced placing
new orders. Domestic plywood market also suffered
corona virus epidemic in 2020 as the market confused and
the prices skidded so all the domestic manufacturers
started curtailing the production since March so total
production decreased.
Volume of imported plywood decreased by 320,000 cbms,
which equals to stop of one and half months¡¯ supply.
Since late 2020, inventory of imported plywood dropped
in Japan but the supply did not recover since the supply
side suffered sluggish export prices with log supply
shortage by labor shortage and insufficient log supply by
foul weather and many plywood mills closed so the
monthly import volume has been less than 200,000 cbms
since last June.
The domestic manufacturers have started production
curtailment program since March 2020 so the production
dropped down by 15-20 % then the market deteriorated in
summer, the manufacturers reduced the production by 25-
30% then they produce only for the demand.
They succeeded to stop oversupply. The shipment of
softwood plywood is 10.4% less than 2019 but the
production is also down by 9.8%. The inventory of
softwood peaked in May 2020 then it has kept dropping
and end of December inventory is 112,800 cbms.
Preparing to accept foreign construction workers
The Ministry of Land, Infrastructure, Transport and
Tourism came up with receiving foreign workers in corona
virus outbreak. The idea is to train foreign workers at their
mother country and reduce sending trainers and lecturers
from Japan to foreign countries. In other words, rearing
trainers locally by lecturing technical education by
telework to local trainers. It will form the system to train
skilled workers in construction fields who have status of
residence in Japan.
Initially it is considering to start in Vietnam then other
countries like Indonesia and Philippines. Presently 642
workers are staying in Japan after finishing skill training
and work with specific skill.
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