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Japan Wood Products Prices

16-31th March 2013


Japan Wood Products Prices

Dollar Exchange Rates of  26th March 2013

Japan Yen 94.46

Reports From Japan

 

  Outgoing BoJ governor urges caution on aggressive monetary easing
The new governor of the Bank of Japan BoJ, Haruhiko Kuroda has said the bank will expand its aggressive monetary easing policy to ensure growth in the economy.


The new governor, who headed the Asian Development Bank before being asked to take the helm at the BoJ, said in the past the bank had been too timid with its policies and he supports the 2% inflation target.


The outgoing governor Masaaki Shirakawa cautioned that expansive monetary policy alone is not the solution but this must be matched by deregulation and a reduction in Japan's huge public debt if the economy is to be turned around.


Tankan survey to undergo modifications
In other news the BOJ has announced it will modify its Tankan survey in three respects:
1) the introduction of a survey on the inflation outlook of firms;
2) the removal of some questions requesting quantitative responses; and
3) a review of survey methods relating to the "conditions for commercial paper issuance" diffusion index (DI).


The Bank intends to implement these changes in the first half of 2014. For more see:
http://www.boj.or.jp/en/statistics/outline/notice_2013/not130322a.htm/


Negotiations begin on EU – Japan FTA
On March 25 2013 the EU and Japan officially launched negotiations for a Free Trade Agreement (FTA). The aim is for a comprehensive agreement in goods, services and investment eliminating tariffs, non-tariff barriers and covering other trade-related issues, such as public procurement, regulatory issues, competition, and sustainable development.


The first round of negotiations will be held in Brussels from 15 to 19 April 2013, full details of the background and importance of this FTA to both sides are provided in an EU press release: http://trade.ec.europa.eu/doclib/press/index.cfm?id=881


Japan is the EU’s second biggest trading partner in Asia, after China. In 2011 EU exports reached euro 49 billion, mainly in the sectors of machinery and transport equipment, chemical products and agricultural products.


In 2011 EU imports from Japan were euro 67.5 billion, mostly machinery and transport equipment and chemical products.


In 2011, EU imports and exports of commercial services from and to Japan were euro 15.9 billion and euro 21.8 billion respectively. Japan is a major investor in the EU. In 2011 the EU inward investment reached a value of euro 144.2 billion.


Japan's inward FDI has increased markedly since the mid-1990s, but remains very low in comparison with other OECD countries (EU investments worth euro 85.8 billion in 2011).

If agreement on a FTA can be secured it is expected to boost Europe’s economy by 0.6 to 0.8 % of its GDP and will create 400.000 jobs. It is expected that EU exports to Japan could increase by over 30%, while Japanese exports to the EU would increase by around 23%.


The negotiations with Japan will address a number of EU concerns, including non-tariff barriers and the further opening of Japanese public procurement.


Both sides aim at concluding an agreement covering the progressive and reciprocal liberalisation of trade in goods, services and investment, as well as rules on trade-related issues.


Negotiations on trilateral FTA and multilateral TTP
During a trade ministers' meeting in Cambodia it was announced that Japan, China and South Korea will begin negotiations on a trilateral free trade agreement. In March this year the first round of negotiations for the FTA began.


The Japanese negotiators have indicated willingness to chair the first three day meeting at which plans will be laid for the creation of separate committees to develop suggestions on tariffs, investment and services.


The Japanese government will also join the other 11 member countries in talks on the Trans-Pacific Partnership. Neither China nor South Korea is participating in the TTP talks.


Japan’s prime minister faced strong opposition to entering into talks on the TPP but has said the TPP could be the key international economic framework to lift the Japanese economy out of its prolonged deflation. Japan has already established a TTP secretariat headed by Akira Amari, the minister for economic revitalization.


Trade news from the Japan Lumber Reports (JLR)
The Japan Lumber Reports (JLR), a subscription trade journal published every two weeks in English, is generously allowing the ITTO Tropical Timber Market Report to extract and reproduce news on the Japanese market.


The JLR requires that ITTO reproduces newsworthy text exactly as it appears in their publication.


For the JLR report please see:
http://www.n-mokuzai.com/modules/general/index.php?id=7


January plywood supply
Total plywood supply in January was 538,400 cbms, 0.4% more than January last year and 3.7% less than December last year.


Imported plywood was over 324,700 cbms, 3.4% less than January last year and 4.4% less than December. This is the second highest monthly import in last twelve months.


Malaysian supply decreased by 28,600 cbms from previous month while Indonesian supply was just about the same as previous month with 89,200 cbms. Chinese supply increased by 13,600 cbms with 79,700 cbms.


Average monthly import for last twelve months is 292,800 cbms. Domestic production in January was 213,700 cbms, 6.9% more than the same month a year ago and 2.7% less than December, out of which softwood plywood was 195,300 cbms, 8.2% more and 3.5% less.


Shipment of softwood plywood in January was 220,100 cbms, which is the second largest monthly shipment in last twelve months and the shipment exceeded over 210 M cbms for four straight months and over 190 M cbms for eight consecutive months since last June.


Inventories of domestic softwood plywood dropped down to 135,300 cbms, 15.5% down from December. The manufacturers comment that considering order balance,
this level of inventory is significantly low.


South Sea (tropical) logs
Log prices in Japan have gone up considerably because of weak yen.


In early March, prices of Sarawak meranti regular are 8,200-8,300 yen per koku CIF, 200 yen up from February and 500 yen up compared to December last year. Meranti small are 7,600-7,700 yen, 400 yen up from last December.


Sabah kapur regular prices are 12,200 yen per cbm CIF, 1,300 yen up. PNG taun prices are about 8,400 yen, 900 yen up. Future prices will be higher yet.


Log suppliers’ offer prices are climbing because of supply shortage by unfavorable weather. Local plywood mills are actively procuring logs and India also restarted buying.


Sarawak meranti regular FOB prices are $265-270 per cbm, $15 up and meranti small are about $230, $20 up.


PNG also suffers foul weather and log production remains low.90% of PNG logs go to China. Log prices went up by active purchase before the Chinese New Year so that the export prices went up. China continues bullish purchase.


PNG’s calophyllum (40%-regular, 30%- small, 30%-super small) FOB prices are $290, $25 higher than last December prices. Taun prices are $230, $10-20 up. Mersawa are $270-280, $15-20 up.


Two years after the great North East earthquake
It has been two years since violent quake and tsunami with incredible power hit the coast of North East Japan in March 2011.


Tsunami destroyed many plywood and lumber mills on the coast then devastated the nuclear power plant at Fukushima, which contaminates wide area with radioactivity and the people had to leave the area.

After the quake, shortage of supply of plywood was feared and huge orders of imported materials to cover the shortage of plywood resulted in plunge of plywood prices.


Also damage of Fukushima nuclear power plant reduces the power supply and there are rising interest to substituting energy issues, which influence even housing equipments in terms of energy saving and conservation.


Five nursery schools in Ishinomaki area were heavily damaged then one larger wooden nursery school was rebuilt by support of UNICEF.


The school master comments that wood building gives warm and gentle feeling and kid could play around with bare feet. There are other new wooden buildings in the area with support from foreign countries.


Canada Wood group donated 4.5 million Canadian dollars for restoration of the area to help rebuild wooden public facilities. As the first step, about a half of the budget is
used to build library and harbor morning market in Natori city, Miyagi prefecture.


It is now looking for applications for the second stage project. Supported projects help activate local business activities.


Looking at damaged wood industry, frantic efforts have been made to bring the business back to tracks. Tidal wave with tremendous power beat down buildings and washed away machineries.


Even remaining machines are caked with mud. Many debris like cars, houses and ships rushed in the buildings and employees had to remove them one by one. In Ishinomaki plywood, wet waste paper floated in from neighboring paper mill and stuck firmly to machines, which employees had to scrape off patiently.


After two years, many restored except for some, which are damaged too much to restore.
Plywood production of Seihoku Ishinomaki is about 70% of that of prior to the quake and Hokuyo Plywood at Miyako is getting back to 60%.


Meantime, public housing for refugees is slow to put up when time limit for temporary shelters is coming shortly.


There are only 56 units built in Fukushima and Iwate prefecture. In Iwanuma, Miyagi prefecture, large development of 300 lots is under way but progress is slow because of shortage of carpenters and materials like concrete.


 


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


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