Japan Wood Products Prices
1-15th December 2004

Dollar Exchange Rates of  10th Dec.  2004

Japan Yen 103.16

Report From Japan

Apkindo proposes minimum prices 

Apkindo, the Indonesian Plywood Association, has announced export plywood price guides after a five-month wait. The announced prices are reflective of higher log and adhesive cost. Although there is no binding obligation on mills to follow the price recommendations they are encouraged to use them as a price guideline.  

The announced prices are US$360 per cubic metre C&F for 12 mm JAS concrete formboard 3x6 and US$340 for 11.5 mm standard panel F 3star. For 12mm hardwood structural panel F 4star the price recommendation is US$390 per cubic metre some US$25-30 higher than the prices in November. 

Prices quoted for JAS concrete formboard panels are now more than US$360 per cubic metre.  

The reasons for the higher prices are increased oil prices which have pushed up transport and adhesives costs, that the log supply is tightened because of strict control of harvests and because log supplies will become tighter in the coming monsoon rain season. Despite the higher prices, Japanese buyers will be better placed to absorb these because of the appreciation of the yen against the dollar.  

Tropical logs 

Domestic sales prices of tropical logs fell further in November as FOB prices bottomed out because of the advancing yen exchange rates. Plywood mills have not cut back on purchases but the drop is simply caused by cost reduction factors.  

For log importers, log sales prices are at just about breakeven at best and some are in deficit so they are strongly resisting lower prices. However, as the yen was appreciating to almost 100 yen to the dollar, the market anticipates nothing but lower prices and the importers are not able to even think about higher prices. 

The momentum is on the side of the log end-users at the moment. Current prices of Sarawak meranti regular are yen 5,900-5,950 per koku CIF, yen 100 down from late October. Small meranti prices are also down by yen 100-150 at about yen 5,200. Kapur prices are around yen 6,300-6,400, 100 yen down. 

FOB prices have slightly rebounded since early December with US$2-3 per cubic metre raise. Until the rain season is over in SE Asia, FOB prices are likely to remain firm because of reduced supply. Some importers see that if meranti regular prices go to US$150 per cubic metre, there will not be much room to move prices further.  

The Japan Lumber Report is reporting that ocean freight is going up again for December shipments due higher bunker oil and higher charter rates. Freight for Sarawak loading (one port loading and two ports discharging) is set to be increased by US$1-2 to US$35 per cubic metre. 

PNG freight would be about US$44, US$1 up. Increasing FOB prices and higher freight will offset all the gains due to the appreciation of the yen for January shipments.  

Second adhesive plant in China 

Zhanjiagang Oshika Chemical Industrial Co, a joint venture with Malaysian companies, has completed a second manufacturing plant in China to produce more adhesives for secondary processing. 

Production of adhesive very high in China and this new plant is in Zhanjiagang some 150 km northwest of Shanghai along Chang Jiang river, where there are many wood processing plants producing plywood, fiberboard and building materials. Adhesive supply in China has been short supply in the past because investment in milling plant got ahead of adhesive production.  

In contrast to the Japanese market, main demand in China is for E1F2star and E0(e 3star) but the new plant can produce F 4star and can tap the adhesive market in Japan. 

Extensive plantations 

Rimbunan Hijau (RH), a major forest products company in Malaysia, started plantation development two years ago with the planting of 20,000 hectares annually in Malaysia. Over the next fifteen years the planted area will be as much as 400,000 hectares.  

The company says it will begin harvests after ten years and hopes to supplement supplies to its plywood mills. Species planted are kelempayan, which is suitable for plywood core use and eucalyptus species such as kamerere. Kelempayan is a fast growing species can grow to about 40 cms in diameter in ten years.

For more information on the Japanese market please

see www.n-mokuzai.com 

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