| Report From Japan
Review Import Duty Proposed
Japan's South Sea Lumber Group has submitted a petition to the director of the Forestry
Agency to abolish the duty on imports of tropical sawnwood products.
Currently there is a preferential duty system for developing countries, which has seen
many changes. Sawnwood imported from Malaysia is one of preferential duty items with a
quota of duty free imports up to a certain import value. By August last year imports from
Malaysia had already exceeded the duty free limit after which a 5-6% import duty was
applied. The Federation has that the government abolish this import duty altogether.
Formboard Market Active
The trade is reporting that the plywood market is firming with active orders for JAS
concrete formboard especially.
Prices are moving up but importers are hesitant to commit for new deliveries, as the
yen seems set to weaken further. For medium and thin plywood, there is little positive
movement except for imported 5.2 mm, so prices remain flat for domestic products.
Wholesalers report that the orders could be leveling off after peaking in mid January.
Manufacturers are pushing softwood plywood prices up strongly but yen 750 on 12 mm CD
grade has not been accepted in the market. The market prices are yen 770-780 per sheet
delivered for imported JAS concrete formboard and it seems set to stay firm through
January.
Domestic concrete formboard prices are up by yen 30 at yen 800-830 delivered to
northern Japan dealers. Softwood 12 mm structural panel (Fc2) CD grade is also firm at
around yen 700 due to inventory correction and higher log cost because of the softer yen.
Suppliers say there are some inquiries for thin and medium plywood items due to active
construction work in the Tokyo area. Prices are yen 240 for imported 2.4 mm, yen 300-310
for 3.6 mm but with a weak future, yen 400-410 for 5.2 mm, which seems to be the bottom.
Overall prices are likely to go up because of tight supply and a weaker yen.
Tropical Log Importers Test Sentiment
Domestic log prices are firming because tropical log importers need to increase prices at
least 10% to avoid losses because FOB prices are up 3% and the yen has dropped 9% since
last November.
Meanwhile plywood mills have been trying to push up prices because log costs will go up
but in the current market that is difficult. Some price increase has been seen for 12 mm
concrete formboard but the thin and medium plywood market continues to be dull, so the
mills will not easily accept a log price increase.
Producers report that export FOB prices are firm. The weather in Sarawak, the main log
supplier started to deteriorate since November and this, coupled with the holidays, and
now the coming lunar New Year's holiday, log production remains slow. Inventories are
reported as tight and purchases by China continue steadily and suppliers intend to sell
whereever they can get the best prices.
January log market prices were reported as yen 4,900 per koku CIF for Sarawak meranti
regular (firming). Based on current FOB prices and the weak yen, the actual cost should be
about yen 5,400 so the importers are down by about yen 500 per koku.
North American Log Imports
Total imports of North American logs in 2001 were 3.9 mil cubic metres dipping below the
4.0 mil. mark for the first time since 1965. This was also 15% down on 2000 imports. The
most recent peak was in 1989 with 11.98 mil. meaning those 2001 imports were 66.5% down on
the peak year.
In 2001, imports in the second half were particularly low at 1.86 mil cubic metres,
20.5% less than the same period of 2000.
Many Douglas fir and hemlock mills such as Next, Kakihara and Taiyo either went under
or closed in 2001 and the lumber market continues to be depressed because economic
conditions and severe competition from various substitutes such as laminated lumber from
Europe. At the same time log prices have stayed high, which pushed lumber prices higher
forcing mills into a corner in the battle with low priced European products. Demand for
North American logs in 2002 is likely to fall further.
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