Japan Wood Products Prices

01-15th April  2005

Dollar Exchange Rates of  8th April  2005

Japan Yen 108.3

Report From Japan

Building materials market 

The Japan Lumber Report says builders have not seen as many inquiries as expected in April. There was some sign that things were improving in February but the demand turned flat again in March. Traders wonder why things are so slow while housing starts continue rather well. 

Building materials manufacturers prepared rather bullish marketing projections based on firm housing starts but, so far, the sales push at the end of fiscal 2004 (March) came to little and some have revised down their annual projections. 

Tropical log prices up slightly in Japan 

At the moment in Japan plywood mills are reported as very cautious in their log procurement because of stagnant domestic plywood sales. Imports of  plywood are reported as slowing because of high FOB prices and domestic mills are

Cutting back on production. In the short term, say analysts, the outlook for plywood is gloomy.  

Adding to the pressure in the market is the fact that tropical log exporters have increased prices and the importers have been forced to chase higher prices.  In recent weeks prices for meranti regular jumped but there are signs of a correction now. 

Importers attempted to raise log prices by Yen 300 per koku but actually in late March /early April settlements they only managed a Yen 50 movement to Yen 5,900-5,950 yen per koku CIF.  

Meranti small prices are close to cost at Yen 5,150-5,200 per koku CIF and super small is about Yen 4,700-4,750. For importers, the losses on Meranti regular is larger than small and super small so they need to continue asking higher prices from the market especially for Meranti regular logs. 

Japnese importers are saying that prices for Kapur are too high for the market and there is only limited demand for floor base. Some floor makers say they now use Meranti instead of Kapur and still export FOB prices continue to go up. 

While it is now possible for everyday harvesting in SE Asia as the rains have ceased, FOB prices remain firm due to largely to heavy buying by China after the New Year holidays. 

Sarawak Meranti regular is at around US$162-163 FOB (SQ up) per Cu.m, US$3-4 higher compared to early March. Kapur log FOB prices are around US$178-180 for regular floaters and US$168-170 for sinkers. This is US$8-10 higher than late January because of tight supply. 

Bourbon whisky barrels for flooring 

It is reported that Itochu Kenzai Corporation has formed a new flooring business by linking companies in three countries. The companies will processes waste bourbon whisky barrels in China and export the flooring to Japan.. Apparently some 500,000 square metres of flooring can be produced annually. 

Bourbon barrels are made of tight grain white oak lumber. They are used for only seven to eight years by law and it has been estimated that there are some one million barrels disposed of every year out of which 800,000 are reused for other liquor and 200,000 are used for planters. Itochu Kenzai, it is reported,  plans to buy 80,000 barrels a year for processing in China, 

Second and third quarter Forecasts 

Japan's Forestry Agency has released its forecasts of supply and demand for the major forest products for the second and third quarter of this year. They say that domestic log supply will decline by 2-3% compared to the same period of last year.  

North American log imports will also decline for both quarters and North American lumber imports will less than last year despite active housing demand. 

European lumber imports, imports of which increased by 9% last year, are expected to be lower than last year because the  strong Euro and high ocean freight costs. This would be the first decline year on year decline for a long time. 

Demand for tropical logs are expected to drop in the second quarter but could jump again in the third quarter. Tropical sawnwood demand could be lower than last year in the third quarter but generally not much changed. However, inventories of tropical lumber at the end of September are expected to be would be less than a months' worth, the same as at the end of December last year and in March.  

Russian logs imports are expected to fall in both quarters while Russian sawnwood imports would be maintained at a level of 200,000 Cu.m. Plywood mills in Japan use imported softwood logs now but the use of domestic softwood logs is expected to increase and replaces some Russian softwood log imports. 

Imports of Radiata pine logs from New Zealand could drop below last year’s level for  both quarters to around 250,000 Cu.m despite active demand for crating lumber.  The fall would be because plywood output will decline. On the other hand, Radiata pine sawnwood imports from New Zealand and Chile could increase in the third quarter because of firm demand for crating and the inventories at the end of September could expand to over two months.  

The Forestry Agency expects imports of plywood to drop in the second quarter down 8.5% and down 7.8% in the third quarter. The supply of locally made plywood in the second quarter could be down but could then return to the same level as in the third quarter last year.

Logs For Plywood Manufacturing      

 For more information on the Japanese market please

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