Japan Wood Products Prices

1-15th February  2005

Dollar Exchange Rates of  21th Jan.  2005

Japan Yen 102.73

Report From Japan

Japan's 2004 housing Starts  

Total housing starts in 2004 have been reported at nearly 1,190,000 units, which represents an  increase of 189,049 units or 2.5% over. Units built for private owners fell in 2004 after two years of improvement but units built for rent increased lifting the overall figure to a second year of improved starts. 

Builders report that demand for housing was active as the national economy has gradually improved and because of the continuing tax breaks on housing loan interest. A driving force for 2004 starts was developers 'built for sale' units, particularly for detached units in the suburban areas. 

Individual owner unit sales declined by almost 1% to 369,852 units while rental units increased by 3% representing four consecutive years of growth. The boom in units built for sale at 345,501 represents  two straight years of gain, an increase of 5.8% over 2003  

Wood framed unit sales stood at 540,746, 3.4% up on 2003 and a share of total starts of 45.4%, which is marginally up on 2003.  

Log prices are rising  

The January log market was unchanged from December tough negotiations between importers and buyers. The importers were determined to raise log wholesale prices in January but failed after the Yen got stronger, moving close to 100 Yen to the US dollar.  

Plywood mills have demanded reduced wholesale prices because of the strong Yen but the importers have resisted this so prices remained unchanged. Sarawak meranti regular log prices are about now between Yen 5,800-5,850 per koku for logs which arrived in December. Meranti small log prices are about Yen 5,000 and super small logs are at Yen 4,600-4,700 per Koku.  

The cost of logs which arrived in January is up due to higher FOB prices and higher ocean freight charges. Sarawak loading charges are now about US$2 per cubic metre higher. With an exchange rate of Yen 104 per dollar, the delivered cost of logs would be about Yen 6,000 per Koku, so the importers need to increase prices by at least Yen 200 per koku.  

Wet weather in Borneo  

Recently rainy weather alternating with a few clear days per week slowed log production. But during late January dry weather in Sabah and Sarawak meant that the headwaters of some rivers were low on water which hampered river transport. So, again, log production has been erratic.  

FOB prices remain firm  

FOB prices for Sarawak meranti regular (SQ up) are about US$155-158 per cubic metre, up US$3 and some exporters are proposing over US$160 per cubic metre which Japanese buyers seem prepared to consider if the increase is kept in a narrow range.  

Kapur and keruing logs are in extremely short supply so that FOB prices have shot up by US$4-5 per cubic metre. Kapur regular floater prices are US$170-171 per cubic metre FOB. Keruing FOB prices are high at about US$205 per cubic metre. Sabah serayah log FOB prices are about US$160 per cubic metre.

In PNG mersawa log FOB prices have reached a relatively high price of at US$170 per cubic metre.  

Compulsory P&I insurance  

Japan's Ministry of Land, Infrastructure and Transport announced that, after March 1, all the vessels calling at Japanese ports must carry P&I (protection and indemnity ) insurance. This is the ship owners insurance to cover liabilities and expenses the event of any mishap such as the loss of the ship, damage to port facilities and marine facilities and oil and chemical spills.  

Recently there have been several cases in Japan of foreign registered ships running aground in Japanese territorial waters and causing oil spill.  There have been cases when the owners abandoned some vessels without paying any recovery or clean up costs which them became the burden of local authorities in Japan.  

The Japan Lumber Report cites cases of Russian registered log vessels which are very old and for which insurance companies may decline cover. The impact of this new move could, say the trade, mean that log arrivals after March may decline or that freight costs may go up due to limited availability of insured vessels.  

Logs For Plywood Manufacturing      

Abbreviations

LM        Loyale Merchant, a grade of log parcel	Cu.m         Cubic Metre
QS         Qualite Superieure	Koku         0.278 Cu.m or 120BF
CI          Choix Industriel	FFR            French Franc
CE         Choix Economique	SQ              Sawmill Quality
CS         Choix Supplimentaire	SSQ            Select Sawmill Quality
FOB      Free-on-Board	FAS            Sawnwood Grade First and
KD        Kiln Dry	Second
AD        Air Dry	WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through	MR              Moisture Resistant
the boards from one log are bundled	pc         per piece
together	ea                each
BB/CC  Grade B faced and Grade C backed	MBF           1000 Board Feet
Plywood	MDF           Medium Density Fibreboard
BF         Board Foot	F.CFA         CFA Franc
Sq.Ft     Square Foot	Price has moved up or down

Source:ITTO