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Japan Wood Market Import Projections for 2002
¡¾Jan.12, 2002¡¿

2002 demand in Japan for imported wood products is projected to fall by 4% compared to 2001. The main reasons cited for the decline are increasing unemployment, falling disposable income and deflation, all of which put pressure on housing starts.

Trading companies are suffering from low margins on their import business coupled with high overhead costs, driven by over employment. Also, lumber and plywood manufacturers are struggling in an over supply situation with ever falling sales prices and negative margins. Under these circumstances, many manufacturers have folded and the sector is expected to contract further in 2002.

The so called, Timber Supply and Demand Conference of Japan, formed by five major wood importer groups recently revealed import projections for 2002. The demand for the housing materials is expected to decrease further in 2002, so imports are likely to be down. Log imports could be down around 4% compared to 2001, plywood imports could be down 10% and sawnwood imports could be down about 2%.

Tropical log imports, at about 2,000,000 cubic metres, is miserable compared to past years. In 2001 three major plywood manufacturers using tropical logs closed their mills and the trade says that every day it becomes more difficult to make money from making plywood from tropical logs. Radiata pine log import from New Zealand and Chile face two different situations. Plywood mill demand for radiata will probably grow but demand from crating mills continues to be soft because sales margins are so low.

Analysts in Japan foresee a similar situation as with the Russian log trade, China, it is felt, will increase purchases of radiata pine logs in 2002 so that the Japanese will not be able to get cheap logs by pressuring log suppliers, as in the past.

North American sawnwood imports are forecast to be less than 3,300,000 cubic metres, a 1,000,000 cubic metre drop in two years. Gains by Russia sawnwood especially red pine, and by semi finished products for resawing are blamed. Radiata pine sawnwod imports may increase simply to fill the gap from lower domestic production.
The total demand for plywood is expected to be around 7,200,000 cubic metres and domestic production is estimated at about 3,000,000 cubic metres leaving a balance of 4,200,000 cubic metres for imports. However analysts feel that domestic production will drop further in 2002 so the demand for imported plywood could be as high as 4,600,000 cubic metres .

2002 Housing Start forecast

The Urban Housing Foundation has revised their projection of new housing starts for 2002 from an initial 1,090,000 units down to 1,050,000 units, being a 7.1% less than 2001. The reasons for the change is the government's decision to phase out the Housing Loan Corporation within next five years and tighter loan qualifications for younger borrowers.

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More Tropical logs for China and India

FOB logs prices for asia/pacific tropical logs are firming after Indonesia banned log exports. As China and India have shifted their buying to Sarawak and PNG, log suppliers are looking for better prices and are turning up the heat on Japanese buyers.

Plywood Market Firming

Since mid December the plywood market has strengthened slightly due to limited availability of imported JAS concrete formboard 3x6 and 2x6 and concrete formboard for coated use.

Export prices in Indonesia and Malaysia are moving as a result of higher log cost during the rain season and reduced production during the holiday period. Action is spurred by a reported increase in inquiries by the Japanese.

The domestic prices in mid December for imported JAS concrete formboard were about yen 750 per sheet delivered in Tokyo region rising to yen 760 for some deals. Importers are targeting another yen 20-30 raise shortly. Extremly low inventories of imported concrete formboard 2x6 are pushing prices up by yen 5-10 per sheet to yen 570-575 per sheet delivered. Export prices on Indonesian JAS concrete formboard are reportedly US$240-250 per cubic metre C&F, or US$5-10 higher than November.

Domestic concrete formboard and boards for coating are also tight in supply because of production cuts by plywood mills. Prices for concrete formboard are firming to about yen 800 per sheet delivered Northern Japan. 12 mm structural softwood plywood (Fc2) prices are also gradually rising to yen 650-680 with an inventory correction in progress.

Misawa to Manufacture Plywood, LVL in China

Misawa Homes, a home builder in Tokyo, has decided to build a plywood and LVL mill in Shandong, China. This will be a joint company with Kohoku Veneer a plywood manufacturer in Shimane Prefecture. Work will start on construction in March or April in 2002.

At start up the mill will manufacture LVL from Chinese poplar veneer and during a second phase it will produce plywood with technical assistance by Kohoku Veneer. The mill's total production capacity will be 15,000 cubic metres per year. This will be the first Japanese company to manufacture plywood in China.