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Japanese domestic plywood mills struggle as log prices edge higher
2002.11.25


Report From Japan

September Housing Starts

September starts were 97,238 units, the third straight month at less than 100,000 units. In particular, condominium starts were 23.1% lower than the same month last year because the starts last year were so high. Owner's units were also down for four consecutive months while only rental units gained.

The six months total starts April to September were 597,672 units, 2.3% less than the same period of last year. Wood based units were 42,546, 2.9% less the same period last year and the share of wood based units was 43.8%, a 1.4 point gain over August. The seasonally adjusted annual starts could total only 1,115,000 units.

South Sea log

Log buyers in Japan are taking wait-and-see attitude in log price negotiations with domestic plywood mills who continue to struggle because log prices have edged higher recently. Despite a slight reduction in import costs because of a stronger yen at the end of October, importers continue to insist on higher prices from domestic mills as they say FOB prices are higher as is ocean freight costs.

Importers have proposed Meranti regular at a minimum of 6,500 yen per koku CIF while plywood mills want to wait and see how FOB prices move suspecting they have peaked and that the yen would strengthen. Another reason for their passive attitude is that log arrivals since August have been rather high. Accordingly, some negotiations between log importers and domestic plymills during October were deadlocked.

With plywood demand skidding lower, mills are cautious in buying logs. Contracted prices of 6,400 yen per koku CIF for Meranti regular were reported in late October and the market is watching closely if the prices go further up. Small Meranti prices were about 5,900 yen, 50 yen higher and super small Meranti was at 5,550-5,600 yen, also 50 yen higher. Prices for Taun and callophyllum from PNG are unchanged at about 5,400 yen.

Prospects for Particleboard

Strong demand is reported for particleboard for floor. While demand seemed to slow in early October, basically demand remains steady and this should last through into the fourth quarter.
20 mm 2x6 prices are at 550-600 yen per sheet.

The demand for kitchen cabinet stock is said to be reasonable with good orders centered on the Tokyo metropolitan area. However, demand from the furniture and woodworking sectors remains sluggish. There are mixed signals in the demand for sheathing for prefabricated housing. The starts of prefabricated units slowed after the summer but the demand for particleboard for construction of rental housing units continues to be steady.

Imports of melamine decorative panels was 10,000 cubic metres in May then it slowed so the balance of supply and demand is balanced.

MDF Trends

In September trade in MDF was active but in October inquiries fell confounding analysts who thought demand would pick up never-the-less overall demand is not bad. Prices for standard 15 mm E0 are 41,000- 43,000 yen per cubic metres delivered, unchanged from last month. There are no more low price (dumping price) items in the market and imports are well balanced with demand now. Thin MDF prices are holding flat at 54,000-55,000 yen per cubic metres delivered for 2.7 mm E0. MDF imports continue to be low with August arrivals being 25,000 ton, 19% less than July

Tropical Log and Lumber Prices

Logs For Plywood Manufacturing
CIF Price Yen per Koku
Meranti (Hill, Sarawak)
Medium Mixed 6,300
Meranti (Hill, Sarawak)
STD Mixed 6,400
Meranti (Hill, Sarawak)
Small Lot
(SM60%, SSM40%) 5,600
Taun, Calophyllum (PNG)
and others 5,400
Mix Light Hardwood
(PNG G3-G5 grade) 4,700


Okoume (Gabon) 6,800
Keruing (Sarawak) @
Medium MQ & up 7,000
Kapur (Sarawak) Medium @
MQ & up 6,600


Logs For Sawmilling
FOB Price Yen per Koku
Melapi (Sarawak)
Select 8,800
Agathis (Sarawak)
Select 8,600


Lumber FOB Price Yen per Cu.m
White Seraya (Sabah)
24x150mm, 4m 1st grade 113,000
Mixed Seraya 24x48mm,
1.8 - 4m, S2S 42,000


Hokkaido suffers blow-down damages

Recently a typhoon passed through eastern Hokkaido and heavily damaged larch plantations.

The full extent of the windblow is not yet known but some speculate that as much as 200-300,000 cubic metres may have been blown down. Damaged areas are mainly on the slopes of the mountain so harvesting will be costly. The logging road system was also affected by landslides due to heavy rain and it will take time to repair the roads and begin hauling out the logs. In some areas the blown trees could exceeds the usual annual harvest volume. Adding to the problem is that it is already snowing in the upland areas and if the windblown trees are not removed beetle damage is likely to high next spring so quick haul is necessary.

Misawa Homes

Misawa homes has disclosed that it has started production of plywood and LVL at their joint venture plant in Shandong Province in China. Monthly production is 500 cubic metres during start up. Local poplar is used to make plywood and LVL.

Misawa Homes has developed and has been marketing a low cost house model called 'Limited 25' to reduce materials costs and it is aggressively sourcing materials from overseas sources. It has established a lumber mill in Finland.

The joint venture company in China is formed by 77% investment of Misawa Home group, 10.2% of Kohoku Veneer and 12.8% from local Chinese company. It locates about 600 kilometers from Shanghai in Shandong Province.


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