Japan Wood Market Summary
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1 JAWIC Japan Wood Market Summary September Domestic wood (Northern Kanto) Tochigi prefecture Arrivals of logs at auction markets are about the same level as in previous years despite the rainy weather that has slowed logging operations. Shortage of sugi logs for posts during the last month has eased. Medium-sized sugi and hinoki logs are selling well and prices remain firm. The only exception is hinoki logs for posts and the price stays rather low. Small logs from thinning have seen modest increase in the sales volume and price. Gunma prefecture Until mid-august sawmills were operating at satisfactory levels but then plunged. They hope orders to be received mid-september onward and lumber sales to pick up. 2. North American wood Logging has resumed in Canada but at a less vigorous level than usual, hence strengthening log prices. US log prices of all sorts are also strengthening due to the shrinking port inventory, which decreased by 30% from August to million scribner (roughly 157,000 m 3 ). Weyerhaeuser s September shipment of Douglas fir IS sort is $750/1000 scribner, an increase for three consecutive months.
2 On the Japan side, arrivals and shipments of logs remain unchanged but inventory is decreasing. Production at large sawmills in port areas in August was smooth. The largest producer of Douglas fir hirakaku raised its price by 2000 yen/m 3 and sales are faring well. Inland sawmills continue to face tough times. Lumber prices in North America seem to be firming up as a result of continued production curtailment. Export prices are going up in some items but not a significant jump. It appears that arrivals of North American lumber will, as seen in the previous years, decrease after August. Shipments from Japanese ports remain unchanged and inventory is gradually building up. Credit risk in the Japanese housing and wood industries has cooled the market vigor. 3. Tropical wood Start of Ramadan and rain are anticipated to slow down logging activities as well as lumber production. Prices of both logs and lumber remain strong. Sales of hardwood such as meranti are in good quantity but other species are stagnant. In Sarawak as well the weather is less favorable to logging compared to ordinary years. Small and medium-sized shippers are not too enthusiastic about log production due to increasing cost. While log supply tends to diminish, local plywood mills are eager to replenish their inventory, hence log prices stuck up high. In PNG and Solomon, log prices remain at a relatively high level. Japanese buyers have difficulty in finding vessel space and face high freight rate. In Japan, arrivals and shipments of logs remain more or less at the same levels but inventory is decreasing. Sales volumes of both peelers and sawlogs are stagnant. Sales of hardwood lumber and poles are improving but lackluster for other items. 4. Russian wood In Siberia which is the main production base of red pine, there were intermittent rain falls for three months June-August and logging sites are still in wet conditions. Log production has been significantly hampered and, therefore, sales offers of red pine logs are very few. Local sawmills do not have sufficient log supplies themselves and sales offers of genban are also few. There have been some offers of spruce and larch in the Vanino area in the Far East but volumes are relatively small. Under the circumstances,
3 prices tend to go up across the board: red pine logs $180/ m 3 (CIF), red pine genban +$390, spruce logs $165, and larch logs $160. Arrivals of logs at Toyama and Toyama Shinko combined in August were 19,434 m 3 (red pine 10,421 m 3, spruce 4,855 m 3, larch 2,509 m 3, Korean pine 1,649 m 3 ), a drop of 33.4% compared to July. Arrivals of lumber including red pine genban dropped 6.5% to 10,873 m 3. Due to the shrinking volume of logs available for sale, it is difficult to determine prevailing prices. Inventory level is months equivalent. Prices of lumber are rising reflecting the decreasing volume of both domestic production and imports. This rising trend is expected to continue since sawmill in Toyama have much smaller-than-usual inventory of red pine lumber and that of imported lumber at the ports of Tokyo and Kawasaki is diminishing. If the price goes up too high, nonetheless, substitutes such as sugi lumber will become more attractive. 5. Plywood Arrivals of peeler logs from both the tropics and Russia are in small quantity. In contrast, consumption of domestic logs such as sugi has been surpassing that of Russian logs in the past few months. Domestic species are emerging as a top supplier of softwood peeler logs. Plywood production in July was 227,000 m 3, which was 16.8% below the level of July Softwood plywood accounted for 179,000 m 3, which is a slight increase from the previous month but -17.1% from a year ago level. Shipment volume was 210,000 m 3, +24.8% compared to July Inventory decreased by 32,000 m 3 from the previous month to 216,000 m 3. Leading softwood plywood manufactures decided to continue production curtailment for the month of September. Sales of domestically produced hardwood plywood are lackluster. Manufactures of softwood plywood try to raise the price but demand is not strong enough to support it. Users and buyers are watching carefully how strong the demand will be to determine the reasonable price level. Sales of imported tropical plywood are not impressive either but prices are firming up. Due to the rising tropical log prices, the trend is expected to continue. 6. Glulam
4 Domestic glulam manufactures have been under production curtailment since the beginning of the year and contract volume of lamina imports has been rather small. At the same time as Chugoku Mokuzai Co. raised the price of dry beam, domestic market for glulam started improving. Demand for European lamina, therefore, is growing again, especially for red wood. However, European suppliers cannot fully meet the Japanese demand for red wood lamina. Seeing the likelihood of price increase of glulam, pre-cut mills are placing orders and some mills already have orders extending into more than a month ahead. A number of glulam manufactures are revving up production. Some home builders, faced with rising costs for various materials, are shifting to sugi glulam. Transaction volume of sugi laminated wood is on the rise. Domestic glulam manufactures, in an attempt to recover the increased costs incurred, succeeded in raising the price of kudabashira by yen/piece. Further price rise was foreseen by many in the market but sudden change in the yen-euro exchange rate has held up the trend, at least for the moment. With regard to imported glulam, manufactures supplying to Japan are still continuing production curtailment due to poor profitability. Negotiation with Stora-Enso for the third quarter ended up in skipping August shipments and very small volume for September-October. The agreed price was around 1900 yen/piece, as offered by trading companies and about the same level as in the second quarter. 7. Wholesale Sales of structural lumber both sugi and hinoki are satisfactory, especially for sugi KD. Prices of Douglas fir KD hirakaku is strengthening. Supply of Hemlock warimono (small items) seems to be tightening. Russian red pine taruki (rafter) is definitely in short supply. High quality North American lumber is selling well. 8. Retail Prices of hinoki dodai are going up and unchanged for sugi products. Douglas fir KD lumber has gone up and Hemlock KD square and warimono remain unchanged. Russian red pine taruki is commanding a high price. With regard to non-structural lumber, high quality yellow cedar is scare and price is rising. Spruce and peeler logs are also strong. Prices of glulam, both kudabashira and beam, remain flat. Softwood plywood is strengthening but tropical hardwood plywood unchanged. Low grade lumber for flooring is firming up. Pre-cut mills are busy digesting orders from the previous month
5 but new orders are fewer than in the past months. Small homebuilders do not have plenty of new construction work but repair and remodeling work is keeping them afloat.
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