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Japan Wood Products Prices

16-31th January 2005


Dollar Exchange Rates of  21th Jan.  2005

Japan Yen 102.73

Report From Japan

The Japan South Sea Lumber Conference (SEA), comprising the Japan Lumber Importers Association, Japan North American Lumber Conference and the New Zealand Sawmillers Conference of Japan, have presented projection of demand for imported wood products for 2005. The demand for imported logs and lumber for 2004 is expected to come in at plus 3% compared to 2003 but in 2005 demand is expected to drop slightly. 

For 2004, the demand increased as housing starts went up (+3% up from 2003). In 2004, log imports increased by 2.8% but in 2005, log imports are expected to drop back down to 2003 levels. In particular, Russian log demand climbed by 800,000 cubic metres in 2004, especially for plywood production, but Russian log imports are expected to fall by 370,000 cubic metres in 2005. 

Meanwhile, lumber demand could continue to increase. Lumber demand in 2004 was up by 3.2% compared to 2003 and it is likely to move up further by 1.5% in 2005.  

By source, lumber imports from Russia, Europe and South Sea countries could be higher while those from North America,New Zealand and Chile could be slightly down. 

Specifically, lumber from Europe could reach 3mil cubic metres and from Russia could jump to 900,000 cubic metres. Despite the strong Euro, which would hamper further growth of demand in Japan, it is projected that the demand for European KD products and lamina would remain firm for 2005.  

Importers raise log prices  

Log production in SE Asia remains slow due to the rain season so FOB prices have been inching up. Sarawak log prices started rising last November.  

Ocean freight for Sarawak loading has been raised by US$1-2 per cubic metre since December and Japanese log importers have been trying to pass on this extra cost during January. For instance, for Sarawak meranti regular which arrived in January the FOB price is ranging from US$153 to US$154 per cubic metre, US$3-4 higher than the bottom prices and the freight is US$34-35 per cubic metre.  

With an exchange rate of 105 yen per dollar, the import cost would be about Yen 6,000-6,100 per koku CIF.  

December costs for the same logs were Yen 5,850-5,950 so the importers need to up prices by Yen 100-150 per koku. However, it is not an easy task to pass on this difference but, because the log importers have been suffering losses throughout last year so they are determined to cover their cost this year.  

The market price for meranti ise unchanged at Yen 5,100 per koku CIF and super small is at Yen 4,800. Kapur prices are firm as FOB prices are up by US$5 since last December. The importers try have tried to lift prices to Yen 6,700-6,800 while the users' idea of prices are at Yen 6,500 per koku CIF. 

Overall FOB prices are gradually rising. Sarawak meranti regular FOB price is US$3 up at US$156-158 (SQ up) per cubic metre and the shippers' new offers are now even US$2 higher. Kapur floater prices are up US$2 at about US$170 and Keruing is over US$200 because of bullish demand from Indian importers but this price is too much for the Japanese market.  

Plywood market segmentation 

The movement of the market for plywood in the Tokyo area market can be segmented into two. One is direct demand by house builders and the other is traditional wholesale channels for retailers and contractors. At the moment the former is much more active but contract durations are changing from the previous quarterly base to a monthly base as the purchasers seem more cautious at present. 

Overall the market for plywood is steady but appears weak according to the Japan Lumber Report. Major plywood makers are holding steady the prices for 12 mm structural softwood panel F 4star(category 1) atYen 850 per sheet delivered Tokyo area but some dealers are selling at Yen 830-840 without any commission. Meanwhile imported JAS 3x6 concrete formboard panel prices are weaker at Yen 850-860 per sheet delivered, despite a reported drop in port inventories. 

The cost of future arrivals of this item could be lower because of the strengthening Yen but the importers are very cautious in future commitment so that any sudden rise in arrivals is unlikely.

Domestic JAS 3x6 concrete formboard panel prices are flat at Yen 920-930 but price movement is slowing because of higher prices compared to imports and the poor demand in Northern Japan as winter snow has disrupted building work.  

The only busy item according to the Japan Lumber report is non-JAS long sheathing for DIY stores with the prices about Yen 750. The price movement of thin and medium thin panels is centered on low priced B and C grade items primarily for temporary construction.  

The prices of domestic thin 2.3 mm F 4Star (category 2) A grade are Yen 10 lower than a month ago at Yen 310-320 and 4 mm medium thin F 4Star (category 1) A grade prices are flat at Yen 480-500. 

Survey on 2005 housing starts  

The Japan Forest Products Journal recently survey opinions on housing starts for 2005 from major house builders and franchised house builder chains. The result from 20 builders is 1,156,000 units, are likely for 2005 which is a slight decline from the estimated 2004 starts of 1,167,000 units disclosed by the Research Institute of Construction and Economy (RICE) last October. 

The reason for the drop could be the scaled down tax break measures on housing loans and slower than forecast growth in personal incomes.  

Some 19 builders forecast 1,156,000 units but estimates ranged widely from 1,145,000 to 1,240,000 units. However, the majority centered on a range of 1,150-1,170,000 units so a slight decline seems to be dominant opinion.  

North American log import by the area  

Estimate of total North America log import in 2004 was 3,624,400 cubic metres, 2% less than 2003. Looking at unloading ports, three ports of Kure, Matsunaga and Matsuyama took 57% of total import while total volume unloaded at 24 ports in Eastern Japan was only 650 M cubic metres with the share of 18%. High penalty of ocean freight for additional port call and small unloading volume make it almost impossible for local deliveries.  

The largest port was Kure, where Chugoku Lumber is with the share of 35% or 1,236 M cubic metres. Second was Matsunaga with 15% share and the third was Matsuyama with 7.5% share. Top three ports received 2,070 M cubic metres with the share of 57%. This tells oligopoly by large sawmills continues to progress and shakeout of smaller inland sawmills continue.  

Logs For Plywood Manufacturing      

CIF Price             Yen per Koku

Meranti (Hill, Sarawak)

Medium Mixed                     5,800

Meranti (Hill, Sarawak)

STD Mixed                  5,850

Meranti (Hill, Sarawak)

Small Lot

(SM60%, SSM40%)             4,700

Taun, Calophyllum (PNG)

and others                    4,700

Mixed Light Hardwood

(PNG G3-G5 grade)            4,200

Okoume (Gabon)         7,000

Keruing (Sarawak)

Medium MQ & up           7,100

Kapur (Sarawak) Medium

MQ & up                     6,700

  

Logs For Sawmilling

FOB Price            Yen per Koku

Melapi (Sarawak)

Select                          8,800

Agathis (Sarawak)

Select                          8,600

  

Lumber   FOB Price Yen per Cu.m

White Seraya (Sabah)

24x150mm, 4m

1st grade               105,000

Mixed Seraya

24x48mm,

1.8-4m, S2S                 42,000

For more information on the Japanese market please

see www.n-mokuzai.com

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


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