Japan Wood Products Prices
1-15th July  2004

Japan Wood Products Prices

Dollar Exchange Rates of  8th July  2004

Japan Yen 108.3 

Report From Japan  

Report From Japan

Laminated lumber market Increasing supply from China  

Shipments of structural laminated lumber to Japan remain steady but the upward movement of prices recently has eased. Imports of structural laminated lumber from China in April totaled 12,447 cubic metres, the first time that imports from China exceeded 10,000 cubic metres in a single month.  China is now the third largest supplier after Austria and Finland.

In the first four months of the year imports from China were 34,436 cubic metres, up 144%  compared to the same period of last year. Raw materials used tend to be Russian red pine and larch, North American cypress and hemlock as well as European white-wood.

As there is no market for laminated products in China all the products are shipped to Japan and the Japan Lumber Report suggests that China may soon surpass Austria as the top supplier.  

May housing starts  

Total housing starts for May were 98,889 units, 0.9% higher than the same month a year ago. However the number of owner and rental units declined but units built for sale increased by 10.2%, which contributed to the overall slight increase. Seasonally adjusted annual starts were 1,169,000 units and May starts meant that there have now been four straight months when the estimated annual starts have been below 1,200,000 units.

North American log price firm

Analysts say that everything points to a continued strengthening of North American log prices. Housing starts in the US continue to be active so demand at home remains robust. Reduced logging, because of the fire hazard, has tightened log supply.

High domestic log production weakens prices

In Japan the rain season this year was short and dry except in Western Japan where several typhoons dumped a lot of rain. Other areas had favorable harvesting weather so log production was maintained. The plentiful output of logs has weakened domestic log prices significantly.

Sawmills in Japan try not to build up log inventories at this time of year since logs deteriorate faster in the hot humid summer weather and there is more chance of beetle damage and sun checking.

Tropical Log Prices up

Sarawak Meranti regular log prices are now at Yen 6,200-6,300 per koku CIF in Japan, which is Yen 300-400 higher than June prices. These logs are costing an estimated US$158-160 per cubic metre FOB and with ocean freight of US$32-33 (one port loading and two ports unloading), the landed price is about $190-193 per cubic metre CIF. At and exchange rate of about 110 yen per dollar, the CIF cost per koku would be about Yen 6,400-6,500. Therefore, even at the current higher prices, the importers are still Yen 200-300 per koku out of pocket.

This is despite the plywood mills having accepted price increases of more than Yen 1,000 per koku since early January.

Kapur prices are reported as also climbing to Yen 6,800-6,900 per koku CIF but the orders are said to be slowing because prices are relatively high compared to Meranti regular. Meranti small log prices are about Yen 5,600 and Super Small logs are at about Yen 5,300 yen. Both are 100 yen per koku below imported costs.

While plywood prices in Japan are firming gradually the rapid advance in log costs is too much for mills to absorb so further increases in plywood prices is unavoidable but all the mills are strongly resisting the higher log FOB prices.

Ministry considers revisions to JAS rules

The Ministry of Agriculture, Forestry and Fisheries is discussing how to revise JAS rules. There were some suggestions to abolish grading on some of forest products.

There was also discussion on changes to registered authorization organizations and registered grading organizations and whether there should be consolidated to form a new product authorization system.

Ocean freight up again

Shipping companies have imposed a US$3 increase in freight since March for Sarawak loadings and this was generally accepted. The current rate for Sarawak loading is US$31-32 per cubic metre and another US$3 hike is being requested, which would bring the rate to US$35. PNG log freight is also up by US$3-4.

Analysts point out that log hauling vessels are aging and there are very few new vessels on the seas.

The sharp increase in FOB prices is making negotiations between importers and plywood mills very difficult and any further increase in freight rates is unacceptable for both importers and plywood mills.

PSI first overseas authorization organization

The Ministry of Land, Infrastructure and Transport has approved PSI as the first overseas organization to authorize formaldehyde emission standards for building materials. Now PSI can inspect various products to see if they conform to formaldehyde emission standards. Approval will enable the inspection through local agents in areas outside North America and Europe.

For more information on the Japanese market please

see www.n-mokuzai.com

Source:ITTO