Japan Wood Products Prices
16-31th July  2004

Japan Wood Products Prices

Dollar Exchange Rates of  23th July  2004

Japan Yen 110.23 

Report From Japan

Domestic cedar log production  

Miyazaki prefecture is the top cedar log producer in Japan and it has been at the top for 13 years. Annual production in the prefecture was 960,000 cubic metres or around 14% of all production in Japan. Total cedar log production in Japan in 2003 was 6,989,000 cubic metres, 1.9% up from 2002. 

Ocean freight up again  

Charter rates for vessels recently seemed to have bottomed out but are increasing once again. Rates on a small (28,000 ton) vessel, commonly used for log shipments peaked at US$25,000 per day at the end of April and by mid to late June rates had dropped to about US$13,000, bout half the peak rate. The Japan Lumber Report notes that rates are firming again and have increased to about US$16,000 per day.  

Charter rates shot because of the demand for space by shippers to China; because of extra demands for shipping space for the middle east and because of fuel price increases.  

Recently the Chinese government has taken steps to slow economic growth and this has slightly cooled international trade volumes.  But there seems to have been an easing of monetary policy, which has caused a new surge in international trade.  

Log prices up on market 

Sarawak Meranti regular log wholesale prices are at Yen 6,300-6,400 per koku, Yen 300-400 up in four weeks. These logs cost the importer the equivalent of about Yen 6,400-6,500 yen per koku (FOB US$158-160 per Cu.m, ocean freight at US$32-33 and a dollar/yen exchange rate of 110).  Because of the rising costs of landed logs and the reluctance of mills in Japan to pay higher prices the importers are still out of pocket by around Yen 100 yen per koku. Prices of Yen 6,300-6,400 yen for logs for plywood manufacture are Yen 1,100 yen higher than the prices in January, a 17% jump.  

Plywood mills have been lifting plywood sales prices but the cost of logs goes up faster than they can push up the panel prices on the Japanese market. Mills say that they have never experienced this before and that it is because of this that there is a trend towards the greater use of softwood logs.  

Russian log imports up  

Total imports of Russian logs for the first half of this year were 3,368,000 cubic metres, nearly 17% higher than the same period of last year. Total yearly imports of Russian logs over the past two years were 5,760,000 cubic metres.  

The heavy arrivals of Russian logs were, in the past, driven by the massive production in Russia and prices were weak.  Now the use of Russian logs is driven by demand in Japan and prices are beginning to reflect this change.  

In years past, low quality Russian logs were sold at low prices during this time of year but today there are no such bargains. Even with the higher volumes that have arrived, the inventory levels at some mills in Japan is reportedly low.  

Analysts comment that it is amazing to see how much supply capacity Russia has since Japan is now only one of the buyers of Russian logs, China and Korea have also become big Russian log buyers.  

Tropical log imports down  

Japan's tropical log imports in the first half of this year were 767,372 cubic metres, 13% less than the same period last year. February arrivals were 47% down and March arrivals were 23% down compared to a year ago.  

The reason for the February/March drop, says the Japan Lumber Report, was that the rain season in the producing countries lasted longer than normal but the overall decline is because Japanese plywood mills have reduced consumption of tropical logs because prices have risen so steeply this year. 

Also in Japan, hardwood lumber consumption has been steadily replaced by alternatives such as laminated lumber and other building materials.  

The change to softwood logs is unfortunate say Japanese reporters since tropical hardwood logs are preferred by plymills for production of face and back veneers for plywood. Tropical timbers are also preferred locally for lumber for interior finishing because they are knot free and perform well.  It is unfortunate, say analysts, that recent increases in prices is killing the demand in Japan. 

Soaring plywood exports by China  

China's plywood exports for the first five months of this year reached about 1.5mil. cubic metres, last year exports of plywood were just over 2.0 mil. cubic metres.  At this pace of growth in plywood exports last year's level will be overtaken by the end of July. If China continues to export plywood at this pace, annual export volume could reach about 3,500,000 cubic metres, which would make China the second largest plywood exporting country after Indonesia. 

Major destinations for Chinese made plywood are the US (428,000 cubic metres), Korea (162,900 cubic metres), P.o.C  (119,100 cubic metres) and Japan (113,000 cubic metres).  

Logs For Plywood Manufacturing        

 July Wholesale Prices

For more information on the Japanese market please

see www.n-mokuzai.com

Source:ITTO