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Japan Wood Products Price and Market Reports　
01 – 15th Aug  2023

Japan Wood Products Prices
Dollar Exchange Rates of 10th  Aug 2023
Japan Yen 144.0
Reports From Japan

  2100 population forecast to be less than half present day level
Early this year Japan’s Prime Minister warned the country will face insurmountable economic and social challenges unless it reverses its population decline. Japan’s population has been shrinking for years, rural towns are being abandoned and the number of old people requiring care is constantly rising. In many cases, especially in rural areas, schools are closing because there are no children.

In 2020, researchers predicted that Japan’s population would decline from the 128 million in 2017 to less than 53 million in 2100. In 1973 2.09 million children were born, in 2022 the number of births was below 800,000.

Options for Japan to address population decline are limited but include opening to migrants and putting conditions in place where by young Japanese couples feel secure to have children.

The Yomiuri Shimbun, one of Japan’s leading newspapers wrote “the risk is that if the low birthrate continues the number of future workers will continue to decline and society will lose its vitality”.

See: https://www.mercatornet.com/the-rising-sun-is-setting-japan-faces-demographic-disaster

Bank of Japan, current policy needs to be maintained
The Bank of Japan (BoJ) has allowed interest rates to rise reflecting rising inflation and economic growth and this has been interpreted as the beginning of a move away from the decades old policy of monetary stimulus. The move by the BoJ had an immediate impact on currency markets with the yen moving slightly higher (yen 141) against the US dollar.

However, the rise was short lived as the US dollar advanced to the 145-yen mark within a few days as a rise in key US long-term interest rates prompted dollar-buying and yen-selling.

In related news, the IMF has urged the BoJ to begin preparations for future monetary tightening. The International Monetary Fund's chief economist, Pierre-Olivier Gourinchas, said our advice for Japanese authorities is that, for now, monetary policy can remain accommodative but the BoJ needs to prepare for lifting rates. BoJ officials, including Governor, Kazuo Ueda, have stressed the need to maintain the ultra-loose policy until there is evidence 2% sustained inflation is achieved backed by wage growth.

See: https://www.imf.org/en/Publications/WEO/Issues/2023/07/10/world-economic-outlook-update-july-2023

Continualyear on year decline in housing starts
Compared to the first half of 2022 monthly housing starts in the same period of 2023 were disappointing as there was not one month when starts exceeded those of the same month a year earlier. Falling housing starts have a direct bearing on wood product consumption and this is apparent when examining data for plywood sales and imports and imports of items such as wooden flooring.

Dangerous heat levels
Last month was the hottest July in Japan in more than a century. The calculations were based on JMA daily average temperature data since 1898 when modern observation methods came into use. A Japan Meteorological Agency official said “August is the always hottest month of the year in Japan and the temperature is forecast to be higher than in average years”.

See: https://www.asahi.com/ajw/articles/14972048

Import update
Assembled wooden flooring imports
There was a slight recovery in the value of Japan’s imports of assembled wooden flooring (HS441871-79) in May compared to a month earlier, however, this was not enough to bring the import value back to around the monthly average for the year. The second consecutive rise in the value of imports in June went some way to recover the average but it is clear that in the first six months of this year the value of assembled flooring imports has trended lower.

Of the various categories of assembled flooring imports in June, HS441875 was the largest accounting for almost 70% of all assembled flooring imports followed by HS441875 at 22%.

Plywood imports
June marked another month of declines in the volume of plywood imports adding to the downward trend which began in mid-2022.

Year on year June 2023 plywood arrivals were almost 45% down with all shippers seeing declines. Falling shipments of plywood from the top suppliers, Malaysia and Indonesia, explain most of the downtrend but in June shipments from suppliers in China also fell.

As pointed out in the latest Japan Lumber report (JLR) Some SE Asian shippers began raising prices in early 2023, driving prices to around US$670 per cu.m which translates to around yen 2,020 FOB per sheet (at an exchange rate of yen 144 yen to the US dollar) and some yen 130 per sheet higher than previously.

In the domestic market plywood prices have been falling so Japanese buyers hesitated to place orders too far in advance.

The JLR reports the inventory of plywood has been declining so Japanese importers must act. Inventories are said to be 40 – 50 % less than the highest volume in October 2022.

Trade news from the Japan Lumber Reports (JLR)
Our apologies for not being able to report trade news from the Japan Lumber Reports (JLR). Most companies and government offices in Japan close for some days in the second week of August and many workers travel to their hometowns for the religious ‘Bon’ festival when it is a tradition to visit the tomb of family members. Others take advantage of the company closures to have a holiday.

This year marks the first summer break since the government lifted all coronavirus pandemic restrictions and highways, railways and airports were jammed during the Bon holidays.

Most timber companies close for at least 2 days in mid-August but many close for 5 days. The Japan Lumber Journal has advised that the next report will be published around 25 August.

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