Japan
Wood Products Prices
Dollar Exchange Rates of 25th
Jan
2022
Japan Yen 115.23
Reports From Japan
Changing tactics to beat
Omicron
Japan is in the grip of its sixth wave of Covid infections
due to the Omicron variant. In less than two months the
number of infections has surged with daily cases
nationwide exceeding 70,000. Emergency measures have
been introduced in 34 prefectures. However, calls are
growing in to classify Omicron/Covid as endemic which
would see the beginnings of a return to normal life. This
idea is advanced as the booster shot programme finally
gets underway and the number of people with serious
symptoms has fallen with this variant.
As Omicron poses a less severe risk than previous variants
there have been calls from the Tokyo governor, the former
Prime Minister, Shinzo Abe and others for downgrading
the legal status of the virus in Japan which would broadens
health care services.
Health experts in Japan have called for a review of the
current approach to the Omicron wave sweeping the
country.They recommend that young people with virus
symptoms should automatically be considered infected
thus dispensing with tests. They also advised that tough
restrictions on people¡¯s movements and other activities are
not necessary.
More than 20 experts, including Shigeru Omi chairman of
the government¡¯s expert panel on the COVID-19
pandemic, presented a draft proposal at a meeting of an
advisory board for the health ministry on 20 January. The
government has said it will review these suggestions and
gather more information.
To avoid straining medical services if the virus continues
to spread the experts said tests and treatment should be
focused on people at a higher risk of becoming seriously
ill. They said the spread of the Omicron variant could peak
in mid February.
See:
https://www.asahi.com/ajw/articles/14527160
Rising household assets but not spending
According to the Cabinet Office assets of Japanese
households have been rising as consumers cut spending
due to uncertainty on how long it will take to bring the
corona virus under control. Data for 2020 shows that asset
increases were the highest level since 1994. Some of the
asset increase is due to the government cash handout
aimed at stimulating consumption but many people opted
to save the money or pay off debt. Stimulating domestic
consumption is key to lifting GDP.
Household spending fell 1.3% in November 2021 year on
year marking the fourth month of decline. Spending for
housing decreased 15.8 percent in reaction to the previous
year's expansion.
See:https://www.japantimes.co.jp/news/2022/01/25/business/economy-business/household-assets-japan-2020/
Record prices for condos
The Real Estate Economic Institute has reported the price
of new apartments in Tokyo rose above a 30 year record in
2021 as demand from dual-income households and
investment purchases by foreigners, especially Chinese,
pushed up prices.
The average price of a new apartment in Tokyo and
surrounding areas in 2021 was yen 63 million yen rising
over the record set in 1990 at the peak of Japan¡¯s
economic bubble.
See:
https://www.fudousankeizai.co.jp/share/mansion/493/s2021.pdf
Housing starts in 2021 came to 8.6 million, up from
the
8.2 million in 2020 but still below the 9.1 million in 2019.
More yen weakness anticipated
The yen was the weakest of the G10 currencies in 2021
and this underperformance has continued into 2022 as the
rate against the dollar fell to a five-year low of 116.4
recently. Several commentators have suggested the yen
could fall further in the coming weeks. JPMorgan Chase
cautioned in a report that ¡°if the yen continued to
depreciate sharply in 2022 it could trigger a long-predicted
capital flight¡±.
Import update
Wooden door Imports (HS441820)
Shipments of wooden doors (HS441820) from China
regularly account for over 50% of Japan¡¯s wooden door
imports. The other main shippers are the Philippines,
Malaysia and Indonesia. The Philipines accouted for 21%
of the value of Japan¡¯s November 2021 imports with a
further 5% arriving from each of Malaysia and Indonesia.
Year on year, November wooden door imports were 13%
lower than in than in 2020 and still below the value of
October 2019 imports. Ignoring the slight increase in the
value wooden door imports in October there has been a
decline in imports that began in mid 2021. Month on
month the value of Novermber door imports were down
5%.
Wooden window imports (HS441810)
In sharp contrast to wooden door imports the value of
Japan¡¯s wooden window imports (HS441810) have been
marching ahead since August 2021 and the value of
November imports are around double that of August.
Wooden window imports are small compared to wooden
door imports as most modern family home are built with
metal window frames, wooden window frames are
uncommon.
November 2021 marked the forth consecutive increase in
the value of wooden window imports. Year on year
November imports were 30% higher and month on month
imports jumped 20%. China and the US together
accounted for almost 70% of November imports of
wooden windows with a further 18% being shipped from
Vietnam and 10% from Sweden.
Assembled wooden flooring imports
After the low seen in December 2020 the value of Japan¡¯s
assembled wooden flooring imports (HS441871-79)
steadily increased and the level of August 2021 imports
lifted the value back to 2019 levels. Following the regular
peaks and dips, the norm for flooring imports, the value of
November 2021 imports while 17% down month on
month was 100% higher than in 2020 and higher than in
2019 (although November 2019 imports were well below
the average for the year).
The main category of assembled flooring imported by
Japan is HS441875 accounting for over 70% of November
2021 imports with the main suppliers being China and
Vietnam. The second ranked category in terms of value of
imports was HS441879 coming mainly from China,
Thailand and Vietnam.
 
In the last months of 2021 the volume of Japan¡¯s
plywood
imports have clawed back to levels seen in 2019, the year
2020 was dismal.
Year on year, November the volume of imports of
plywood (HS441210-39) jumped 45% but there was little
changed in the volume of imports compared to October.
Indonesia and Malaysia dominate the supply of plywood
to Japan and in November deliveries from Indonesia were
about the same as in October but Malaysia saw a slight
increase in volumes shipped compared to October.
Of the various categories of plywood imported in
November (as in other months) HS441231 was the most
common accounting for almost 90% of imports.
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/
South Sea logs and lumber
As reported separately, State of Sabah, Malaysia reopens
log export but reaction in Japan is indifferent after South
Sea log demand largely decreased while Sabah stopped
exporting logs for almost four years and even concerned
people say that how they can rely supply source, which
banned export twice in the past.
Chinese made South Sea laminated freeboard is facing
confusing factors. In China, prevention measures of
COVID 19 are getting stricter for the Winter Olympic,
which include restrictions people¡¯s movement so logistics
are confusing. Production cost is climbing so there is no
room for the manufacturers reduced the export prices.
Indonesia is experiencing the same situation with shortage
of containers. Japan has ample inventory so the market is
quiet.
Sabah, Malaysia reopens exporting log
The state government of Sabah, Malaysia, has cancelled a
prohibition on exporting logs of May, 2018 in 3rd January,
2022. There will be a new rule to export logs. According
to a local newspaper in Sabah, a new rule is that 20% as an
upper limit of harvested logs from natural forest in a year
will be exported. Also, the exporting companies are
required to have certain status and standard and to apply
for a ship with documents.
Sabah province used to be a main place for tropical logs
once before. The total volume of tropical logs imported in
2017 was 146,806 cbms out of which 48.5% came from
Sabah. It was 71,202 cbms.
After Sabah province banned exporting logs in 2018,
Japan looked for another source such as Papua New
Guinea, but it did not work because Papua New Guinea
had announced they would ban for exporting logs too. All
those factors affected in a Japanese plywood company
named Daishin Gouhan Kogyo in Japan to stop
manufacturing plywood of tropical logs. This is the last
large South Sea log consuming plant.
The supply of tropical logs shrunk in Japan and the total
volume of January to November in 2021 was only 20,871
cbms. There is still uncertain about whether the logs
would be exported from Malaysia due to Coivd-19
spreading in Malaysia even now and a lack of workers.
So many Japanese companies are not really interested in
about reopening exporting tropical logs from Sabah,
Malaysia.
Plywood
Softwood plywood supply continues extremely tight and
precutting plants run the business on a hand-to-mouth
basis by lack of plywood. Plywood mills are running in
full but consumption is over the production. Also it is time
for log harvest but competition with lumber and laminated
lumber plant is fierce and plywood mills are not able to
procure ample logs. Russian larch veneer arrivals are also
delayed so mills struggle to procure raw materials.
Orders from precutting plants are increasing since early
January so short supply seems to continue for some time
Prices of imported plywood continue escalate on both
supply side and market in Japan. The largest manufacturer
in Malaysia stopped accepting orders in last November but
it started taking orders in limited basis with higher prices.
Log supply is tight in the rainy season and log prices are
high and also adhesive prices inflated.
Export prices of JAS concrete forming 3x6 are over $800
per cbm C&F and further increase is likely. Buyers in
Japan have to accept the prices if they need it. Further bad
news is weakening yen and confusion of logistics. In port
warehouses, delay of devanning by heavy arrivals of other
cargoes, which stagnates plywood distribution. Confusion
of shipping hampers smooth distribution and on demand
side, there are many short items.
Russia bans log exports
It is reported that the Russian government bans log export
since January then it imposes export duty of Euro 200 on
green lumber with more than thickness and width of 10
centimeter (moisture content of more than 22%).
Since July 2012, 10% duty has been imposed on green
lumber such as taruki and stud but now with Euro 200
duty, it is not possible to buy larger size lumber and resaw
into smaller size lumber. The government set
softwood log export duty in 2007 with 6.5% on contracted
prices then increased to 20% since July 2007, 25% since
April 2008, 80% since January 2009 to promote domestic
processing.
There are some exceptions on border trade near North
Korea and Finland but duty rate is 80% so it is not
practical for log trade. This ends long history of Russian
log trade with Japan. It started back in 1954 then closes 67
years¡¯ history.
In response to the ban the EU lodged a challenge with the
WTO saying the ban is illegal and harms the EU wood
processing industry.
Domestic logs and lumber
A demand of domestic lumber has been decreasing slowly
since last autumn. This situation seems continuing in
February too. The prices of domestic lumber would
decrease but plants and distributors hesitate to cut the
prices, so an extent of decrease is low.
The price of Japanese cedar KD post is ¥100,000 -
¥120,000 for 3m x 105mm. Japanese cypress KD
foundation is ¥130,000 - ¥140,000 for 4m x 105mm. This
is slightly stabilizing.
120mm of cedar posts and cypress foundation is ¥20,000 -
¥30,000 cheaper than 105mm of same kinds because there
is little demand for 120mm recently. Some plants started
reducing product of 120mm to balance supply and
demand.Since the temperature in Eastern Japan dropped
suddenly at the end of the year, logs froze and that made
production of lumber declining by 20 - 30%.
In the middle and western part of Japan, the prices of
domestic logs are dropping quickly due to excessive
inventory of logs and lumber.
Especially, in the western part of Japan, the price of
cypress is now ¥25,000 - ¥30,000 which is ¥15,000 -
¥20,000 cheaper than before.
Usually, there are small volumes of logs at the end of the
year but there are still enough logs in this season. On the
other hand, it had been foul weather in Eastern Japan and
Hokkaido so there is lack of logs in those area.
People are rushing to buy cedar and larch logs because
logs are tight for lumber and plywood. The price of cedar
post had increased in the Eastern Japan and decreased in
the middle and western part of Japan. It costs around
¥14,000 - ¥16,000 through the nation.
Daiken to chart bulk ship for MDF
Daiken Corporation had decided to chart a general cargo
ship to bring MDF made in Sarawak, Malaysia to
Yokkaichi port, Japan without stopping at any ports for the
first time.
Due to a delay at a port of transshipment, there are many
MDF unshipped which have been affecting the sales in
Japan. The problem of transshipment in Malaysia affects
two companies called Daiken Sarawak Sdn. Bhd and
Daiken Miri Sdn. Bhd which produce MDF of tropical
hardwood.
The container ship usually ships to Johor Bahru, Malaysia
for transshipping from Sarawak, Malaysia and then ships
to Japan.
A delay of transshipment of wood product occurs in other
ports like Kaohsiung or Taipei, Taiwan, Busan, Korea and
Shanghai, China.
Daiken Corporation charts a 9,000 ton ship named ¡®Apollo
Beni¡¯ at early to middle of January, 2022. This ship brings
3,000 cbms of plywood and 6,000 cbms of MDF from
Indonesia to Nagoya via Yokkaichi port, Japan. It takes
about a month to arrive to Japan normally, but this time, it
is going to take only two weeks.
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