Japan Wood Products
Prices
Dollar Exchange Rates of
10th September 2014
Japan Yen 106.85
Reports From Japan
econd quarter GDP revised down
Japan‟s second quarter GDP has been revised down to
minus 1.8% according to the most recent release from the
Cabinet Office.
See:
http://www.esri.cao.go.jp/jp/sna/data/data_list/sokuhou/gai
you/pdf/main_1.pdf
With the revised data the fall in second quarter GDP was
the worst since 2009 when GDP was severely affected by
the global financial crisis.
For the financial year ending in March 2015 annual GDP
growth is likely to be lower than forecast because it is
taking longer than expected for consumers and businesses
to recover from the‟ tax hike shock‟ which has resulted in
a sharp drop in capital expenditure and consumer
spending.
The pace of growth in the July-September quarter will
decide whether or not the consumption tax is raised further
to 10% in October 2015. The Bank of Japan chief has
suggested that the fall in consumer spending is temporary
and consumer spending will pick up in the third quarter.
Consumer Confidence Index
Consumer confidence in Japan fell slightly in August
which confounded government analysts who expected an
improvement. The full data is available at:
http://www.esri.cao.go.jp/en/stat/shouhi/shouhi-e.html
The overall consumer confidence index fell to 41.2 in
August from 41.5 in July. Out of the four main sub-indices
three declined in August. The Overall livelihood index for
August was 39.1 (up 0.6 from the previous
month); Income growth 38.5 (down 0.6 from the previous
month); Employment: 47.8 (down 0.9 from the previous
month) and Willingness to buy durable goods: 39.5 (down
0.1 from the previous month).
The long term trend in the consumer confidence index is
shown below.
Business sentiment weakens
Japan‟s Business Outlook Survey for the period July-
September was published on 11 September.
See:
http://www.esri.cao.go.jp/en/stat/hojin/hojin-e.html
The report shows that in August business sentiment for all
regions in Japan was the worst for three months with the
diffusion index for business conditions down 0.7 points
from July to 46.2. The main reason cited for the bad news
is weak exports and rising production costs now made
worse by the weakening of the yen.
The manufacturing sector in Japan is facing rising energy
bills as the country struggles to adjust to the shutdown of
all nuclear power plants pending safety inspections. The
government‟s assessments of the Coincident Index is
given below.
Despite the somber news, the BoJ maintains that the
Japanese economy is continuing to recover so its monetary
policy can stand for the present. But financial analysts are
raising doubts on whether the 2% inflation target can be
achieved without a change in policy at the Bank.
Weaker yen a double edged sword
Since mid-August, the yen has fallen almost 4% against
the US dollar sliding to 106.95 on 11 September. The
main cause of the abrupt change is the conviction that the
US Federal Reserve will stop buying assets within a month
and by the flow of funds out of the yen into dollars
because of firm signals that the US economy is improving.
The weak yen is a double edged sword for Japan, exports
become more competitive but imports more expensive and
Japan faces huge energy import bills made more costly as
the yen weakens. However, a spokesperson from the BoJ
denied the Bank was relying on a weak yen to lift
consumer prices.
While the BoJ governor has said the yen weakness “won't
be a minus for the economy” business leaders do not
appreciate a fluctuating yen, preferring the yen:dollar rate
to stay between 105 to 110. The BoJ‟s decision in mid-
September to maintain its current policy opened the door
for more yen weakness.
Trade news from the Japan Lumber Reports (JLR)
For the JLR report please see:
http://www.nmokuzai.
com/modules/general/index.php?id=7
Additional species for Wood Use Point system
The administration office of the Wood Use Point system
announced that it added two more species as eligible
species for the system.
They are European spruce and European red pine from
Finland. They are not approved for newly built units since
the point is issued by September 30. Formally added
European spruce and red pine from Sweden and radiate
pine from New Zealand are approved as qualified species
since August 15.
There is difference by the prefecture in ruling. By other
construction methods than previously registered methods,
condition is to use following species more than half of
structural members in Iwate, Kyoto and Nagasaki
prefecture. Species are cedar, cypress, larch, fir, black
pine, Ryukyu pine, yellow cedar, Douglas fir from the
U.S.A. and spruce from Austria.
Yamasa Mokuzai acquired JAS on CLT
Yamasa Mokuzai Co., Ltd. (Kagsohima prefecture) has
acquired JAS certificate on CLT (cross laminated timber)
on June 30. Species are cedar and possible producing sizes
are 450 mm in thickness, 2,000 mm in width and 4,000
mm in length. The annual production is 4,000 cbms.
Yamasa Mokuzai is one of establishing member of Japan
CLT Association and it has been promoting panel use of
structural laminated lumber like floor, wall and ceiling. It
has built full scale two story house with cedar CLT with
which they test floor impact sound insulation performance
on CLT composite floor and observe aging degradation.
North American log imports up in first half 2014
According to the summary the tallying organizations made
up, total import of North American logs were 1,789,000
cbms, 4.3% more than the same period of last year. Logs
for sawmills in major Douglas fir ports like Kure,
Matsunaga and Kashima decreased considerably by mills‟
slower production but log arrivals increased for the ports
like Ishinomaki and Sakai Minato where plywood mills
are so increase of logs for plywood mills offset decrease of
logs for sawmills.
Volume for top three port of Kure, Kashima and
Matsunaga where Chugoku Lumber and other major
Douglas fir sawmills like Toa decreased and total of three
ports was 852,000 cbms, 13.6% drop and share of three
ports in total import was 47.6%, 7.6 points down from the
same period of last year. Another port of Matsuyama
where another large Douglas fir sawmill, Tsurui Sangyo
is, showed 19% decline as well.
Meantime, plywood ports showed considerable increase.
Sakai Minato had 12.6% more. Ishnomaki shows 50.6%
more. Nanao had 16.3% more. Komatsushima had 25.5%
more and Akita had 4.8% more. They have been using
Douglas fir logs mainly from Canada.
Russian logs and lumber
With continuing demand slump, port inventories of
imported Russian lumber like red pine 30x40 mm remain
high and the arrivals have not declined yet so supply glut
feeling is heavy in the market. Arrivals seem to continue
steady through the summer so the adjustment won‟t be
done until sometime in fall.
The market prices continue declining little by little without
any bottom in sight so the buyers minimize the purchase
volume.
The importers and wholesalers are not able to make any
future purchase in this situation. Median offer price of red
pine lumber by the suppliers is about US$500 per cbm CIF
but there are variety of prices offered by the suppliers so
arrived cost varies.
Imported cost of standard items is about 60,000-62,000
yen per cbm FOB truck port yard but actual market prices
are 55,000-58,000 yen. Quality lumber market prices are
65,000-67,000 yen at best for the import cost of 68,000
yen.
Domestic sawmills reduce the production of red pine
30x40 mm to avoid head-on competition with imported
Russian red pine lumber but because of confused market
of imported lumber, market prices of domestic products
are uncertain.
Sash manufacturers’ overseas expansion
Lixil has been aggressively making merger and acquisition
of overseas companies then YKK AP and Fuji Sash have
started overseas expansion. YKK AP has made overseas
business expansion as one of the major business plans for
its mid-term plan during 2013 and 2016.
It made sales amount of 71. 25 billion yen in 2013 and
aims 79.8 billion yen in 2014. In the U.S.A., it will make
expansion of the facilities and in Taiwan P.o.C, it plans to
shift to market higher grade products. It plans to start
marketing a new merchandises in Indonesia.
In the U.S.A., it started expansion of resin window frame
manufacturing facility. It has been manufacturing window
frame since 2007. Specialty is the window which flying
objects cannot go through in hurricane. With housing
starts recovering in the States, it decided to increase the
production capacity to make multi layered glass window
and resin window frame.
By 2015, the production will be double from 2013 level.
Sales in the U.S.A. in 2013 were about 16 billion yen and
the target for 2016 is 19 billion yen. Fuji Sash plans to
expand overseas sales in next two
years.
 
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