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Japan Wood Products Prices

16-31th August 2013


Japan Wood Products Prices

Dollar Exchange Rates of  27th August 2013

Japan Yen 98.35

Reports From Japan

 

  Decision on raising sales tax vital for government credibility
The Japanese government has convened a working group of economists, business leaders and representatives of consumer bodies to prepare recommendations on plans to raise the consumption tax to 8 percent in April 2014 from the current 5 percent.


It has been proposed that a further increase taking the tax to 10 percent will be introduced in 2015.


The prime minister has said he would make a decision in the autumn when revised GDP figures for the first half of the year become available and would take into account the views of the working group just established.


The latest economic data is providing support for the consumption tax rise but analysts worry that this move would add to household costs at a time when income growth is stagnant.


Consumer confidence declined in July for the second consecutive month signalling that most consumers expect prices to increase. Recent data shows that consumer prices (excluding fresh food) are indeed rising.


Revision of US GDP figures weakens yen
The yen weakened marginally against the dollar in late August after the US announced revised GDP figures for the second quarter indicating growth was almost double the initial figure for the quarter.

Cabinet Office sees improvement in Japanese economy
In its August assessment of the Japanese economy the Cabinet Office concludes that the Japanese economy shows signs of recovery such as:

  exports and industrial production are increasing at a moderate pace.

  corporate profits are improving, mainly among manufacturers and business investment is    leveling off and shows some movements of increasing.

  Private firms are judging that current business conditions are improving.

  the employment situation is improving.

  private consumption continues to grow.

recent price surveys indicate that the deflation is ending.
Stronger recovery is expected if increased corporate profits lead to higher household income and greater corporate investment.


According to the June Short-Term Economic Survey of Enterprises in Japan (Tankan) by the Bank of Japan, planned business investment in fiscal 2013 is expected to increase for the third consecutive year for manufacturers, but investment by non-manufacturers is expected to decline for the first time in two years. Overall the assessment is that investment is expected to increase for the second consecutive year.


According to the Business Outlook Survey by the Ministry of Finance and the Cabinet Office, planned business investment in fiscal year 2013 is expected to increase both for large manufacturers and large non-manufacturers.


The figures for Orders Received for Machinery, a leading indicator, have been improving recently.

See http://www.esri.cao.go.jp/en/stat/juchu/1306juchu-e.html


Housing market supports growth prospects
Housing construction is increasing especially privately owned homes and houses for rent, overall, construction activity is picking up.

The Cabinet Office says the short-term prospects for house building is firm with an upward trend supported by work on reconstruction and by an improvement of the employment and income situations.


However, the construction sector is already reporting a shortage of skilled workers and the Cabinet Office identifies this as a risk to sustained growth in the housing sector.


Employment situation improving
The rate of unemployment fell 0.2 percent in June from the previous month to 3.9%. In June the unemployment rate of those aged 15 to 24 was 6.4%, (down 0.7%)

however, the labor force and the number of employed persons increased.


The ratio of job offers to applicants has been rising because of an increase in the number of new jobs being created and the data show that overtime hours worked in the manufacturing industry are rising. These trends need to translate into rising incomes if the fledgling growth in the economy is to be supported.


To boost economy, get more women working
Japan's working-age population is projected to fall to about 60 million in 2030 from a peak of almost 80 million in 2000 but it has been estimated that Japan could add millions to the workforce if the proportion of working women was lifted to the same level as the average in the OECD countries.


The impact of the added work force would be a boost to the economy, to household incomes and consumer spending.

 


The current government in Japan is the first to lay out concrete proposals for expanding the female workforce as a means to address the declining workforce without having to expand immigration as this has very little support across the country.


Exports to major trading partners improve
Japan’s Ministry of Finance released export data on the 19 August showing July exports fell around 1.6 per cent from June, to yen 5.78 trillion, see:
http://www.mof.go.jp/english/


However, exports rose more that 7% when compared to the performance in July last year. Exports to the EU improved for the first time in almost two years growing over 8% as did exports to the US (+15% year on year) and China (+ almost 10% year on year) .

While the weaker yen has given a boost to exports it has led to a nearly 20% jump in the import bill. This increase was largely because of the impact of oil prices but also, encouragingly, Japanese companies have been importing manufacturing equipment.


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.


South Sea (tropical) logs
Log supply season has arrived in the South East Asian countries but actual log supply in Sarawak, Malaysia continues tight. The reason is depleting resources.


Log production in the first six months in Sarawak this year was about 20% less than the same period of last year but the log demand for export and domestic plywood mills remain firm so that a balance of supply and demand is way off.


More than 60% of export logs from Sarawak go to India, which reduced the purchase for a month or so then it restarted buying since late July. To fill up large size log ships, Indian buyers need to pay high log prices when the suppliers’ log inventory is low, which influence export log prices for other markets.


Export log prices at hand on Sarawak meranti regular are holding at $280-290 per cbm FOB. Meranti small are softening at $250. Sabah’s mixed serayah regular prices are also holding flat at about $270.


Log prices in Japan are firming with high FOB and weak yen. Sarawak meranti regular prices are 10,100-10,200 yen per koku CIF. Sabah kapur are 13,700 yen.


Facing continuous high log prices, only solution to cover the higher cost is to keep increasing higher sales prices of plywood.


Plywood
Domestic softwood plywood market continues firm with brisk demand. Shipments for house builders and precutting plants are active.


June production was 223,200 cbms, the highest in six years and three months then the shipment was 220,400 cbms. This is nine consecutive months with monthly shipment over 200 M cbms. The inventory remains low with 129,900 cbms. Thus, undertone is solid.


Only negative factor is delay of construction works because of shortage of workers, which puts brake on delivery of processed materials.

Plywood mills had to give up price increase on 12 mm 3x6 panel for July and August after gradual price hike in every month.


In Tokyo metropolitan market, prices of 12 mm 3x6 (special type/F 4star) are up by 10 yen from July at 940-950 yen per sheet delivered.


Long 9 mm 3x10 prices are flat at 1,370 yen. Thick 24 mm 3x6 prices are 1,910-1,920 yen, 40 yen up from July. Market prices of imported plywood are weakly holding with high port inventories.


Shipment from warehouses is increasing since last May but heavy arrivals in April and May over 340 M cbms still remain as negative factor. With this issue, purchase for futures declined so that the arrivals seem to drop since August.


Port inventories should decline to balance supply and demand
Market prices of JAS concrete forming 3x6 panels are 1,120-1,130 yen per sheet delivered, 10-20 yen down from July. JAS 3x6 concrete forming for coating is 1,220-1,230 yen, 10-20 yen down. 12 mm structural panel prices are 1,120-1,130 yen, 10-20 yen down and weakening.
 


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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