Japan
Wood Products Prices
Dollar Exchange Rates of 10th
Jan
2024
Japan Yen 158.00
Reports From Japan
Continued wage increases
are key
In 2024, the Japanese economy began a shift to becoming
‘more normal’ with three interest rate increases, the third
year of price increases and a second year of wage
increases.
In 2025 Japan is expected to experience a continuation of
wage and interest rate increases which should see the
economy growing more than 1 percent in inflation-
adjusted terms in fiscal 2025. It is anticipated that wage
increases will give a boost to consumer spending. Whether
Japanese employers will raise wages in 2025 faster than
the previous year holds the key to the economy's ability to
put itself on a domestic demand-led sustainable growth
path this year.
Wages need to grow faster than inflation to boost personal
consumption, a key engine of economic growth that has
been weak because of high prices. The forecast is for wage
growth outpacing prices, helping a recovery in personal
consumption. The consumer price index excluding fresh
food is expected to rise slightly more than 2 percent, a
slower pace than in fiscal 2024.
The Japan Center for Economic Research compiled
forecasts by 37 private-sector economists for the fiscal
year that starts in April. They predict average real growth
of 1.1%, a more optimistic projection than for the current
fiscal year (0.4%).
However, the projections also note downsides including
potential tariff increases by the incoming US
administration which could impact growth around the
world. A prolonged downturn in China's economy would
also have negative repercussions in Japan.
See:
https://www3.nhk.or.jp/nhkworld/en/news/20250106_B01/#:~:te
xt=Economists%20predict%20that%20Japan's%20economy,a%2
0boost%20to%20consumer%20spending.
No steady economc trend opening way for rate hike
At its December policy board meeting the Bank of Japan
(BoJ) decided to keep its benchmark interest rate
unchanged, saying it will continue to target the short-term
rate at around 0.25%. This sent the yen to a one-month
low in December. Prior to the BoJ decision the US dollar
was already firmer above 154.50 yen after the Federal
Reserve hinted at a slower pace of interest rate.
The judgement appears to be that over the next few
months the BoJ will monitor wage trends, inflation and the
effects of policy changes in the US. The BoJ last raised
rates in July but the latest decision marks the third-straight
time for it to hold policy steady. Some officials have
observed that Japan's economy and prices are trending as
predicted and this could provide the opportunity for future
rate increases.
See: https://www3.nhk.or.jp/nhkworld/en/news/20241219_B02/
Private sector machinery orders stall
The total value of machinery orders received by 280
manufacturers operating in Japan increased by 21% in
October compared to the previous month on a seasonally
adjusted basis. Private-sector machinery orders, excluding
volatile ones for ships and those from electric power
companies, increased a seasonally adjusted by 2% in
October.
Cabinet Office data showed, on a year-on-year basis, core
orders (a highly volatile data series) regarded as a leading
indicator of capital spending in the coming six to nine
months, grew 5.6%, (forecast at 0.7%).
By sector, core orders from manufacturers jumped 12.5%
month-on-month in October while those from non-
manufacturers dropped. The Cabinet Office left its
assessment of machinery orders for October unchanged,
saying the recovery was pausing.
See: https://www.esri.cao.go.jp/en/stat/juchu/2023/2310juchu-
e.html
Consumer spending – no clear signs of strength
Japanese households continue to cut spending as inflation
is driving up prices which suggests the Bank of Japan is
likely to take a cautious approach to interest rate increases.
Spending by households dropped 1.1% from a year earlier
in September compared with the consensus estimate of a
1.8% decrease, after sliding 1.9% in the previous month
according to a report by the Ministryof Internal Affairs.
Spending only rose twice in the 12 months to September
2024.
Outlays on housing, transportation and communications,
durable goods and health care dropped.
Consumer spending in Japan has consistently failed to
show clear signs of strength as shoppers have been forced
to cope with prices increasing at or above the BoJ’s
inflation target over the past 30 months.
The yen’s weakness is a key factor weighing on the
purchasing power of Japanese households. Consumer
confidence slid for the first time in five months in October
after Japan’s currency fell to the weakest level in almost
three months. Consumer spending, which accounts for
more than half the economy, is still below pre-pandemic
levels.
See: co.jp/business/2024/11/08/economy/september-household-
spending/
Strong US economy lifts dollar against the yen
As of the 10 January the yen stood at 158 to the US dollar
and has progressively depreciated since September last
year.
The yen exchange rate tends to be affected by the
difference in interest rates between Japan and the US.
Currently, interest rates in the US are much higher than in
Japan.
Even though the yen did show signs of strengthening the
current rate against the dollar is a reflection of a stronger
than expected US jobs report, falling unemployment and
wage growth in the US.
Homes getting smaller
According to the latest government survey houses in Japan
are getting smaller with the average floor space falling to a
30-year low. The average area per house is now about 92
square metres, a decline of 3 sq. metres from the peak in
2003. One of the main reasons is rising construction costs.
Builders are designing smaller homes to hold prices
stable
while at the same time maintaining their profit margins
which could be viewed as a ‘stealth price hike.’ Analysts
There are concerns that young couples living in small
homes may be deterred from having children. The
declining birth rate is a serious problem in Japan.
See: https://asia.nikkei.com/Economy/Japan-homes-shrink-to-
their-smallest-in-30-years
New homes to be fitted with solar panels
The Tokyo government adopted an ordinance on 15
December 2024 requiring new homes and buildings to be
fitted with solar panels making Tokyo the first place in
Japan to require solar panels on new detached houses. The
ordinance will come into force in April 2025. Under the
new rules the obligation to install solar panels for large
structures, such as office or apartment buildings, falls on
anyone who commissions their construction.
See: https://www.asahi.com/ajw/articles/14794249
Import update
Assembled wooden flooring imports
After the peak in the value of assembled wooden flooring
in March 2024 there was a sharp decline until June but
despite the change in direction the value of imports in the
period July to October did not recover. Year on year the
value of assembled wooden flooring (HS441871-79) in
October was down around 14% and compared to a month
earlier the value of October imports dropped 10%.
.
As in previous months the main category of assembled
flooring imports was HS441875, accounting for 74% of
the total value of assembled flooring imports. The second
largest category in terms of value was HS441879 (13%), a
decline compared to September. The third category of
import was HS441873 (13%) with the balance being
HS441974.
Of HS441875 imports 61% was provided by shippers in
China up sharply from a month earlier, 26% by shippers in
Vietnam. The three other sources of assembled flooring
(HS441875) in October were Malaysia, Thailand and
Indonesia.
 
Plywood imports
The volume of October plywood imports (441210-39) was
122,810 cu.m (130,998 cu.m in September) representing a
decline (8%) on levels a year earlier and the first decline in
total plywood imports since May 2024.
In October the volume of arrivals from producers in China
was around the same level as a year earlier and up slightly
from September .The volume of arrivals from both
Malaysia and Vietnam came in below levels seen a year
earlier while the volume of imports from Indonesia was up
year on year.
As in previous months, of the various categories of
plywood imported in October HS441231 was the largest
accounting for about 90% of the total volume of plywood
imports with the balance fairly evenly distributed across
the other HS codes. Malaysia and Indonesia accounted for
most of the HS441231 arrivals. Shipments from Vietnam
and China were spread across the categories tracked. Other
shippers appearing in Japan’s plywood import statistics in
October included Latvia and New Zealand.
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/
October plywood supply
Total plywood supply in October, 2024 was 403,000
cbms, 3.8 % more than September, 2024. This is the
highest plywood supply per month in this year. One of the
reasons is that production and shipment of domestic
plywood are this year’s best volume. Imported plywood is
almost leveled off from last month and this is three
straight months decreasing.
Production of structural softwood plywood is 6.7 % more
than the previous month and shipment is 10.3 % more than
last month. Production of plywood in August and
September 2024 exceeded shipment. As a result, inventory
at the end of month kept rising for two months in a row.
However, shipment in October, 2024 was more than
production and the inventory at the end of October is
160,000 cbms, 3.3 % less than September 2024.
Shipment of plywood rose at several domestic plywood
manufacturers, trading companies and wholesalers in
October, 2024. However, it is hard to say that the plywood
market is lively because the new starts and floor areas are
still low.
The price of softwood plywood had been declining until
October 2024 and there were a lot of spot purchases from
consumers so it could say that the actual demand had
increased. The imported plywood was 0.3 % less than the
previous month. Malaysian plywood was 25.0 % less than
last month and this was the lowest volume for the first
time since August last year. Indonesian plywood was 0.3
% less than last month. Since the yen appreciated rapidly
after the middle of July 2024 consumers limited
purchasing 12 mm Malaysian plywood.
North American logs
North American logs and lumber markets are still
sluggish. Orders to precutting companies recovered
slightly. A precutting company says that the price of
European lumber reaches the bottom so if the price of
European lumber rise, the price of Doulgas fir lumber in
Japan would also rise. On the other hand, the price of
domestic small sized lumber has been low and house
builders keep demanding precutting companies to lower
the selling price. The consumers would keep purchasing
the domestic small sized lumber.
A major Doulgas fir lumber manufacturer in Japan
lowered the price of KD Doulgas fir beam in September
and October 2024. Therefore, there is a prediction of a
price drop in not only North American lumber but also the
imported lumber. However, the price has been leveled off
since then.
South Sea logs and wood products
Supply and demand for South Sea logs are balanced.
South Sea logs for from Malaysia and Papua New Guinea
arrived in Japan in December- January 2025 and the logs
will be delivered to Japanese lumber and plywood
manufacturers. If the logs arrive as scheduled, it would be
enough volume for the first half of 2025.
Demand for South Sea logs for pallets or blocks for steel
manufacturers has been low but for blocks for
shipbuilding is firm. The price of South Sea log in South
Asia is high due to the increasing labor cost. However, the
yen is stronger than before so the import cost would be
low.
Movement of South Sea and Chinese lumber is sluggish
due to the weak yen. Japanese distributors are not in rush
to purchase a lot of lumber because they have minimum
volume of lumber for their job.
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