Japan: Timber demand projections for fourth quarter 2011 and first quarter 2012

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Japan’s Forestry Agency has released projections for demand for the fourth quarter of this year and the first quarter of next year. A summary of these projections has been reported by the Japan Lumber Reports (JLR). According to the projections, during the fourth quarter demand for logs to be used for sawnwood and plywood production is forecast to be 3,580,000 cu.m, the same level as the forth quarter last year. Of the total log demand, imported logs are forecast to make up 1,145,000cu.m, 11.3% more than the fourth quarter last year.

As the plywood mills that were damaged in the March earthquake will soon be back on-stream, log demand for plywood production should increase in the fourth quarter then ease slightly since the first quarter of each year is traditionally a slow period for the timber industry, says the JLR. Demand for imported plywood in the fourth quarter is expected to continue to be firm as restoration work in the quake hit areas gathers momentum.

N. American suppliers the main beneficiaries of demand for logs
The Forestry Agency says the increased imports of logs will mainly benefit North American suppliers. Demand for logs in the fourth quarter will be driven by demand for sawnwood for reconstruction in the quake hit areas and by improving housing starts, however a slight downward adjustment of demand is foreseen for the first quarter of next year.

Forecasts suggest that demand for North American sawnwood should also remain firm as housing starts improve and this will be most apparent in the fourth quarter and in the latter part of the first quarter.

Consumption by plywood mills continues to shift to softwood logs
Demand for tropical logs in the fourth quarter is expected to be no different from levels in the same quarter last year however, the trend for plywood mills to shift to using softwood logs is expected to continue.

Russian logs currently not competitively priced
The Forestry Agency is expecting demand for Russian logs to fall in the fourth quarter as these logs are not competitively priced. However, it is possible that new price structures will emerge and this could lead to greater Russian log imports in the first quarter, especially as demand from Japanese sawmills for raw material grows.

Sawnwood demand forecast to rise and remain firm
into the fourth quarter In contrast, the Forestry Agency says the consumption of Russian sawnwood should increase in the forth quarter even though ‘genban’ demand is currently limited due to high inventories of this product. Demand for Radiata pine sawnwood in the fourth quarter is expected to increase and to remain at these levels into the first quarter.

Large wholesalers sell off imported stocks for mid year book adjustment
During September, trading firms and large wholesalers sold off stocks of imported plywood as it was mid way in the financial year and the time to prepare interim company results.

This stock disposal added to the weak market prices for plywood seen in August and fuelled further weakening which has spilled over into October. The JLR reports that it will be difficult for prices to recover in the short-term. However, trading firms have been seeking higher prices on imported plywood. The wholesale asking price for concrete formboard, JAS 3x6 panels was Yen 980 per sheet in the third week of the month but importers are now asking Yen 1,000. Some report that inventories are getting tight and that sales are rather steady with active orders from DIY stores. Currently, there is no more extremely low priced plywood on the market however, markets vary by items and regions.

Concrete formboard for coating moving well Inventories of coated 2x6 are reportedly limited, but prices are flat at Yen750 yen per sheet. Concrete formboard for coating (3x6) is moving well for condominiums and detached houses says the JLR and prices are about Yen1,100 per sheet and firming.

Structural panel prices are down to about Yen 950 per sheet because of high inventories but despite this importers are asking Yen 1,000 per sheet. Malaysian concrete formboard (JAS 3x6) export prices are around Yen 42,000 yen per cu.m C&F says the JLR. August arrivals of imported plywood were about 320,000 cu.m but they have been declining since the peak in May.

Slow start to construction of large scale wooden public buildings
It has been a year since the law promoting the use of wood in public buildings was enacted. In response to the new law the Ministry of Land, Infrastructure and Transport first prepared standards for wood use in public building maintenance. Following this, 32 prefectural governments had, by the end of September, prepared their own plans for wood use initially in the maintenance of public buildings. Although the law became effective a year ago, no large scale public buildings have been built using wood and this, says the JLR, is because it takes several years from the design stage to actual construction of large public buildings.

Private house builders fastest to move on wood use in large construction projects
The government’s call for the use of more wood in large buildings has been taken up by the private sector. Many large construction and house building companies, which did not have the capacity to design large buildings using wood, have newly established specialised divisions to handle this.

The JLR reports that there are moves to construct wooden commercial buildings and offices. While private construction companies have not seen any firm response from local authorities for large size wooden public buildings there are increasing numbers of projects for medium sized wooden buildings for semi-public facilities such as homes for senior citizens, nursery schools and kindergartens.

There are a number of problems to be overcome before wooden public buildings become more common. One problem is the availability and distribution of JAS certified sawnwood which is limited says the JLR. Over the past year more sawmills have secured JAS certification but still the volume of JAS sawnwood is insufficient.

Also, there is a lack of communication between architects and the mills. For example, the JLR points out that information on wood products (distribution volume, price and performance) has not reached architects so they are not equipped to take up the challenge of designing large scale wooden buildings.

Japan Log and Sawnwood Prices in Japan
Logs for Ply Manufacture, CIF
Meranti (Hill, Sarawak)
Yen per Koku
(koku=0.278 m3)
Medium Mixed
9,100
Standard Mixed
9,300
Small Log (SM60%, SSM40%)  
9,200
Taun, Calophyllum, others (PNG)
8,000
Mixed light hardwood, G3/4 grade (PNG)
-
Keruing MQ & up (Sarawak)
12,500
Kapur MQ & up (Sarawak)
12,700
Logs for Sawmilling, CIF
Yen per Koku
Melapi (Sarawak) High Select
210,000
Agathis (Sarawak) High Select
-
Lumber, FOB
Yen per m3
White Seraya (Sabah) 24x150mm, 4m, Grade 1
148,000
Mixed Seraya, Sangi 24x48mm, 1.8-4m, S2S
58,000

Wholesale Prices (Tokyo)
Indonesian & Malaysian Plywood Size (mm)
Sept
 Oct
(¥ per sheet)
2.4mm (thin plywood, F 4star, type 2 ) 920 X 1830 390
370
3.7mm (med. Thickness, F 4star, type1) 910 X 1820
550
540
5.2mm (med. Thickness, F 4star, type 1) 910 X 1820
650
630
12mm for foundation (F 4star, special) 910 X 1820
1130
1120
12mm concrete-form ply (JAS) 900 X 1800
1050
970
12m coated concrete-form ply (JAS) 900 X 1800
1170
1100
11.5mm flooring board 945 X 1840
1530
1480
3.6mm baseboard for overlays (OVL) 1230 X 2440
1000
990
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