Japan
Wood Products Prices
Dollar Exchange Rates of 10th
Jul
2021
Japan Yen 110.12
Reports From Japan
Forth state of emergency covers
Tokyo
The Japanese government has declared another COVID-19
state of emergency in Tokyo until 22 August to combat a
recent surge in infections. This period covers the duration
of the Olympics.
To assist countries struggling to contain the virus Japan
will donate 1 million vaccine doses each to Indonesia,
Malaysia, the Philippines and Thailand. The Tokyo
government will also offer 1 million doses each to Taiwan
P.o.C and Vietnam in addition to the 1.24 million and 1
million already provided.
Japan has secured enough AstraZeneca vaccine doses for
60 million people and approved their use in June but does
not intend to use them immediately in public inoculation
programmes due to uncertainty over the risk of blood clots
reported from overseas.
In related news, the government announced a suspension
of the private sector and university vaccination programme
it promoted a few weeks ago. Under this scheme
companies and educational institutions were encouraged to
set up vaccination programmes for staff and students.
As local authorities ramped up their vaccination efforts
and as the private sector began vaccinating workers
demand for vaccine doses began to outpace availability.
This resulted in the central government warning the stock
of vaccines was running out so the pace of vaccinations
should be slowed.
See:
https://www.japantimes.co.jp/news/2021/07/01/national/vaccinesupply-crunch/
International demand growth behind positive business
outlook
In the second quarter of 2021 business confidence among
big Japanese manufacturers rose to a 36 month high
according to the latest Bank of Japan (BoJ) survey. It was
improved demand in international markets that was behind
the more positive business outlook.
The BoJ survey even suggested service sector sentiment
had started to improve for the first time in five quarters.
The question is how quickly can the economy emerge
from the pandemic with a resurgence in infections and the
slow vaccination programme which is having a negative
impact on domestic consumption.
Corporate spending rises
Orders for machinery by Japanese companies rose for the
third consecutive month in May, a sign companies believe
the country is closer to overcoming the coronavirus
pandemic. The rise in orders reveals a revival in corporate
spending which is essential to accelerate growth.
Bank of Japan plots support for ¡®Green
Lending¡¯
The latest challenge for Japanese banks is how to
contribute to greening the economy through helping
polluters transform to greener enterprises. The easiest
solution would be to cut lending to companies identified as
big polluters but this would undermine efforts to a
transition to cleaner industries.
The Bank of Japan has indicated support for commercial
banks that take on innovative financing of companies but
it will involve careful balancing ensuring the overall
economy is unaffected by targeted funding for green
projects.
https://www.japantimes.co.jp/news/2021/07/01/business/economy-business/banks-climate-transition/
Household spending on the rise
Household spending in Japan rose almost 12% in May, the
third month of year-on-year increases and the second
highest increase since 2001.
However, spending on travel and entertainment was far
below pre-pandemic levels. Caution is required when
viewing the steep rise as this was from a very low level in
May 2020 when spending crashed due to the
announcement of the first state of emergency.
State of emergency puts brake on yen
appreciation
Reports from around the world of surging infections due to
the Delta variant resulted in a movement of cash to ¡®safehaven¡¯
currencies such as the yen and the Swiss franc.
The early July hint of dollar weakness boosted the euro
but had little impact on the yen. With Japan facing a forth
state of emergency in the capital the yen is unlikely to
experience any major strengthening.
Commercial real estate sector a winner
While Japan¡¯s recovery rate is yet to catch up with that in
other advanced economies it has been one of the bestperforming
commercial real estate investment markets
since the pandemic began. In the first quarter of this year
Tokyo attracted more investment in real estate than most
other big cities accounting for nearly US$8 billion in
transactions. Demand for office space, even as work from
home continues, accounted for over 50% of investment in
Japan in the first quarter, virtually unchanged from prepandemic
days.
See:
https://www.scmp.com/comment/opinion/article/3138980/japans-economy-may-be-lagging-its-property-market-star-performer
Import update
Wooden door Imports
Shippers in China and the Philippnes accounted for over
80% of Japan¡¯s May imports of wooden doors
(HS441820) a slight drop on the value of April imports
due mainly to the success of Malaysian shippers to capure
a 4% share of May imports with another 2% from US
shippers.
Year on year, the value of May 2021 imports were 27%
higher but compared to the value of April imports there
was a 15% decline. The correction was not surprising after
the high level of imports in March and April.
Wooden window imports
The value of Japan¡¯s wooden window imports continued
to rise in May. Compare to a month earlier, the value of
May imports were 7% up and year on year, May imports
were 15% higher. There has been a steady rise in the value
of wooden window imports between January and May this
year bring average monthly imports back the around the
same level as in 2020 but well below the value in the same
period in 2019 before the impact of the pandemic.
For the first time in years shippers in the US emerged as
the top shippers in May accounting for 43% of Japan¡¯s
imports of wooden windows (HS441810). Shippers in
China accounted for a further 37% of May impoprts
followed by the Philippines at 19%.
Assembled wooden flooring imports
Year on year, the value of Japan¡¯s imports of assembled
wooden flooring (HS441871-79) in May was down 4%
but compared to a month earlier May imports were down
once again.
As in previous months imports of HS441875 were the
highest category of wooden flooring imported with most
coming from China. In March imports of HS441875
accounted for around 60% of imports but in May the
figure jumped to 75%. Shippers in China accounted for
61% of HS441875 arrivals in May followed by Vietnam at
19%.
Malaysia and Indonesia together accounted for around 5%
of the value of May imports and shipments from these two
countries were about equal.
Plywood imports
Out of the four main suppliers of plywood to Japan it was
only shippers in Malaysia that saw the volume of May
shipments rise. Shipments of plywood from Indonesia,
Vietnam and China all dropped month on month in May.
Shippers in Indonesia have now seen a decline in the
volume of shipments to Japan drop for two consecutive
months.Year on year the volume of Japan¡¯s May imports
of plywood (HS441210-39) was little changed from May
2020 but compared to April the volme of imports dipped
around 4%.
Of the various categories of plywood imports,
HS441231
accounted for most of May imports. Shipments from
Malaysia comprise 95% of HS441231, Indonesia 98%,
Vietnam 69% and China 56%.
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/
Domestic lumber market
In Tokyo region, lumber prices have been steadily
climbing since last March. In early April, cedar post prices
exceeded over cypress post prices and reached 80,000 yen
per cbm FOB yard.
Since then the prices continued soaring week after week
and in late May, the prices seem to be lulled momentarily
with the prices of 110,000-120,000 yen on cedar post and
stud, 120,000-130,000 yen on cypress sill.
Since the supply of lumber became tight, auction market
prices led the lumber prices and after early May holidays,
the prices took off without any ceiling and by late May,
cedar post prices are 120,000-145,000 yen and cypress sill
are 120,000-150,000 and large volume moved with these
prices.
KD cedar 105 mm post prices are 53,000 yen up until last
March, which soared to 110,000-120,000 yen by early
June. KD 105 mm cypress sill prices are 63,000 yen until
last March, jumped up to 120,000-130,000 yen by June so
both prices doubled in three months.
Supply shortage and high prices continue in June but
upward momentum seems to be easing now. Demand is
shifting to lower priced air dried or green lumber from
KD.
Panic buying is slowing down but in auction market,
prices stay up high on supply tight items like post, stud,
sill and beam but there is no record high prices any more.
The dealers seem to be seeking settling level of prices and
try to cool overheated market.
Lumber dealers are concerned to contractors¡¯ move, which
withhold house sales since lumber prices keep soaring so
rapidly and the prices keep changing week after week so
the dealers wish to stabilize lumber market prices.
They mix lower priced old inventory with high priced
fresh products to lower the average prices down but low
cost inventory is decreasing rapidly. There is no possibility
that the prices go downward but steep increase seen in last
three months is over now.
Radiata pine crating lumber
The New Zealand Log Sawmillers Conference of Japan
held meeting by web to exchange the information on May
27.
Export prices of New Zealand radiate pine logs
continue
climbing by aggressive purchase by China so the sawmills
in Japan cutting radiate pine logs announced lumber sales
price hike in April by 5,000 yen per cbm and they plan to
raise the prices by 10,000 yen since August as log cost
continues climbing.
Export log prices for China keep soaring and degree of
price increase is record high. Log prices for China are
$190 per cbm in late May and $195 by the end of May so
the prices keep advancing week after week and $200 is in
sight. This pushes log prices for Japan and further increase
is likely toward fall.
Sawmills in Matsunaga area (Hiroshima prefecture)
announced 10,000 yen hike since August 1 and five
sawmills in Susaki area (Kohchi prefecture) also
announced 10,000 yen increase after August.
Movement of crating lumber is not active so sawmills are
running four to five days a week. They increase the prices
by 5,000 yen in April and in some areas, they are all
accepted but in other areas, price increase is still
progressing slowly little by little.
In Susaki, June ship¡¯s arrival is delayed by two weeks so
log inventory is getting very low and some mills need to
curtail the production.
With 5,000 yen increase in last April, total increase in
August will be 15,000 yen per cbm but this does not cover
all the cost yet.
Impact of wood shock for small contractors
The National Federation of Construction Workers Union
made survey of impact of wood shock for small contactors
and found out about cost of 20% of newly built houses
cannot be passed onto buyers.
The survey made by sending out questionnaires to small
member contractors and 166 replied. The members are
small contractors to build one or two units of house a year.
Total units built in 2019 was 303 and 277 in 2020.
Regarding the price and delivery term of the contracts of
183, 46% is no change, 26% needs to be discussed for
change and 17% cannot change. About 20% of contracts
remain unchanged as to the prices and delivery term.
Majority of change is refused by the house buyers so it is
impossible to pass higher cost onto buyers so the
contractors need to absorb increased cost, which about
US$5,000 per unit.
Reasons of unchangeable contracts are that it cannot get
estimate by precutting plant for processing (17%),
uncertain delivery time (15%) and uncertain specifications
and species of materials of building materials.
Prospect of contracts the members for new houses are 216
but more than half is not firmed up because of uncertainty
of price and delivery term. Because of delay of delivery,
extension of housing loan tax reduction, which ends in
September is necessary.
South Sea logs
It should be full log production season in Malaysia but
labor shortage continues and it takes time to get harvest
permit so there is slim chance that log production recovers
and rainy season is getting near. India continues
purchasing aggressively in Sarawak, Malaysia and PNG.
There is very little demand for logs in Japan so there is not
much concern to the log supply situation.
Chinese laminated free board production is steady and the
prices are getting higher. There are some orders of
building materials like laminated post so the
manufacturers are in no hurry to take orders.
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