European Whitewood lumber has seriously been short in the Japanese market recently, as they have

increased their exports to the U.S. market instead of the Japanese. The U.S. users have been moving

from the high-tariff-imposed Canadian products to European items, which they purchase at a higher

price than Japanese buyers do. As the suppliers will be entering the season to take summer

holidays, their production will decrease. Even under the weak demand, where nothing fundamental

has improved as represented in home building, the shortage of Whitewood products seems to keep

gradually going, as well as the price rising. Five-ply laminated connective posts from European

Whitewood lamina, which take a half share in the post market in Japan, have suddenly become

difficult to find. As a result, the products have been priced up by 200 yen per piece, and many

lumbermen are increasingly looking for a substitute in the markets, namely other foreign species as

American timber, and Japanese Cypress. One sawmiller of Japanese Cypress receives a sharp

increase in orders for special first grade of KD posts, and cannot meet demand because of delay in

procuring material logs. Also, the price of Hemlock posts has been firmer--arrival volumes of this

item have drastically reduced with the weaker demand for these few years, resulting in an extremely

light stock in the distribution stage. In the stud market, there are some demands for Japanese

cypress as a substitute for European Whitewood, which has a share of 80-90% at present in Japan,

and the supply capacity of the substitutive species including Hemlock and Red Pine would not

enough. But a big producer Enso in Finland has decided not to decrease its exports to Japan, and

therefore the Japanese market would not face to can extreme difficulty in securing studs. Still, the

market price of studs has risen up by 2,000 yen from May to 44,000 yen per cubic meter as of

late-June. The shortage of the products will continue at least until the autumn. As a sequence, for the

time being, American and Japanese species will also be able to enjoy some active business and

firmer market, for the shortage of European products. Nagoya Market Whitewood products mainly

laminated connective posts are tight and well-demanded, showing all in a strong mood. Trading firms

tried to raise 100 yen per piece of five-ply laminated connective posts (105mm square) from the July

price to 1,750-1,800 yen for August sales. Japanese manufacturers of laminated lumber who are

carrying received-orders for more than one month refrain from accepting new orders because of of

the shortage of lamina and higher costs, and are working primarily for big users, precut mills. The

prices are quoted at 1,700 yen per piece for five-ply connective posts (105mm square), 45,000 yen

per cubic meter for solid studs, and 46,000 yen for finger-jointed. Japan imported 902,700 cubic

meters of European softwood lumber in January-May, that clearly describes how much it has reduced

compared with the year-ago results of 1,028,600 cubic meters. This shrinkage of 12% in the imports

proves the shortage of European products, about which the market concerns. The top sources during

the first five months of this year were Finland with 328,200 cubic meters, Sweden with 309,800 cubic

meters, and Austria with 160,000 cubic meters. This shows that the supply volumes from the largest

two countries became quite closer. While Finnish products dropped substantially by 63,500 cubic

meters, the Swedish extended 9,100 cubic meters, in comparison with the record in the same period

of last year. Like Finland, Austria has also reduced its supply to Japan greatly by 83,900 cubic

meters from a year ago. One reason was that the exchange rate has been advantageous for Swedish

suppliers who sell in Swedish krona or U.S. dollar, whereas Finnish and Austrian companies do their

business in euro. Another part of the reason is that most of the exports from Finland and Austria are

served by the major suppliers as Enso, Metsa Timber, Schweighofer, and Stallinger that go through

Japanese trading companies, while on the contrary, many middle-scaled producers from Sweden are

doing face-to-face business, listening carefully to the requests from Japanese end-users, such as

laminated lumber mills, precut plants, wholesalers, and regional builders, and they have won the

customers' reliance. The way the Swedish suppliers take is different from what the Finnish and

Austrian exporters do, and that has resulted in the trade volumes for January-May. It is almost

impossible for the Swedish suppliers to reduce supplies to Japan or to shift to the U.S. market, since

they have spent much time and energy to produce what the customers want. Therefore, the Japanese