Japan Wood Products Prices

1-15th January 2006

Japan Wood Products Prices

Dollar Exchange Rates of  6th January  2006

Japan Yen 114.58 

Report From Japan

Plywood imports decline again 

Total supply of plywood in the Japanese market in October was 615,000 m3, down 6.1% from September and 2.4% from October 2004, the seventh consecutive monthly decline. Japanese imports of plywood (regular and special plywood and block board) were 332,000 m3 in October,down 9% from September and 6.3% from October 2004. This was the lowest monthly level since March 2003 as a result of a contraction of the imports of JAS concrete forming panels and 12mm structural panel due to a depressed market. The plywood import volume level has been at around 300,000 m3 for four straight months since July 2005.

Domestic production of standard plywood in October was 283,000 m3, down 2.4% from  September but up 2.6% from October last year. The percentage of plywood imported declined to 54%, down 1.8 points from the previous month and the smallest in 2005. 

By source, imports from Malaysia and Indonesia in October were 157,000 m3 (down 9.7% from September but up 11.3% from October last year) and 125,000 m3 (down 14% from September and 27% from October last year), respectively. The reductions were the result of lower plywood production in both countries due mainly due to log shortages and higher fuel costs. Plywood imports from China, the third largest supplier, grew for the four straight month to 36,000 m3 , up 31% from October 2004.

Domestic plywood prices moved up 
The market for imported 12mm plywood remained very firm in December due to short supply. Manufacturers of softwood plywood are taking advantage of the situation by pushing for higher prices. It was expected that thick panels (24 and 28mm) would follow the price hikes seen in thin panels.

Japanese tropical plywood mills have been gradually raising sales prices as log cost continues to rise. Further raises were expected due to rising log prices, higher adhesives and boilers’ oil costs and the depreciating yen. Japan’s Keytec co., which had raised plywood prices in November, raised the prices for medium-thick and thick panels by 5% from 21 December. Maruhi co., Ltd., which had raised plywood prices in October, increased its plywood prices by 7% for orders after 21 December. Japan’s plywood manufacturer Niigata Gouhan Shinko Co., Ltd. raised its plywood prices by 7% from 21 December. Prices were 560 yen for 4mm F 4star (category 1) sheet delivered Tokyo (up 10 yen), 470 yen for 3mm F 4star (category 1) and 680 yen for 5.5mm F 4star (category 1).

 Generally, price hikes of tropical hardwood panels are slower compared to softwood panels but prices are gradually inching up due to the short supply of imported thin panels. The availability of imported 12mm plywood is very limited and prices continue to rise. Prices for imported JAS 3x6 concrete forming panels were at 910-920 yen per sheet delivered Tokyo in December, up 60 yen from November. Prices for imported tropical 12mm structural panel F 4star (prime category) were at 930- 950 yen, up 50 yen. 

Japan forecasts tropical timber demand for 2006 According to a Japan 
Southsea Lumber Conference survey, the prospective demand for tropical logs is forecast to decrease 5.1% to 1,391,000 m3 in 2006. Out of this total, 1,248,000 m3 (90%) would be for plywood production and 143,000 m3 for lumber production.

The main log consumption regions for plywood production are expected to be Tohoku (283,000 m3), Keihin (208,000 m3), Chugoku (172,000 m3), Aichi (160,000 m3) and Shikoku (120,000 m3). The main consumption regions for lumber would be Aichi (50,000 m3), Kinki (40,000 m3), Keihin and Chugoku (13,000 m3 each) and Tohoku (10,000 m3).

Logs and sawnwood divert further from Japan
Southeast Asian logs continue to be actively bought by China and India in producing centres, which is keeping prices firm. Production of locally sawn timber in Indonesia and Malaysia’s Sabah for the Japanese market, where there is no price growth, is sluggish. Sawnwood manufacturers are gradually shifting the export market from Japan to other countries that are willing to pay higher prices.

At the Southsea Lumber Conference in Tokyo last November, there where reports of an almost “unrestrained logging” situation in Solomon Islands. The export of tropical logs from Solomon was expected to reach one million m3 in 2005 (the same level as in 2004), while the annual standard logging level had been 350,000-400,000 m3 in the past. Logging is believed to have rapidly increased due to a sharp rise of exports to China (600,000- 700,000 m3 per year). The situation is raising concerns in the country and some importers warn that restrictions on the logging volume or on the export species could be eventually imposed. Solomon Islands is Japan’s third largest tropical log supplier after Malaysia and PNG.

Imports of Southeast Asian sawnwood reached 455,000 m3 during January-October 2005. Out of this total, unprocessed sawnwood accounted for 211,000 m3, down 13% from the same period a year earlier, while processed sawnwood accounted for 244,000 m3 (down 2%). The volume of processed sawnwood was therefore greater than that of unprocessed sawnwood. Sawnwood imports from Indonesia, Japan's largest supplier together with Malaysia, decreased 17.3% compared with the previous year.

Japan’s Housing and Loan Corporation announced that the standard interest rate for housing loans would be raised from 3.26% to 3.34% from 10 January.

The graph below shows ocean freight for timber shipments from Sarawak to Tokyo (1 uploading, 3 downloading ports). The trend of the freight rates is clearly upwards reflecting fuel increases and growing freight demand from other commodities.

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  Plywood grades. Letter(s) on the left indicate face veneer(s), those on the right backing veneer(s). Veneer grade decreases in order B, BB, C, CC, etc.	MBF           1000 Board Feet
Plywood	MDF           Medium Density Fibreboard
BF         Board Foot	F.CFA         CFA Franc
Sq.Ft     Square Foot	PHND             Pin hole no defect grade
Hoppus ton     1.8 cubic metres	Price has moved up or down

Source: ITTO'  Tropical Timber Market Report