Japan: Timber industry in crisis

Damaged infrastructure and a shortage of fuel brought all businesses in the region to a halt. As a result, the supply of plywood in the major markets of Tokyo and Osaka was badly affected. Other unaffected sawnwood and plywood mills have plans to increase production to supply wood materials for restoration work, but they are also suffering from periodic electricity blackouts.

Ports in Hachinohe, Sendai, Sohma, Onahama and Hitachinaka are closed and shipments being are diverted to Tokyo and Kawasaki. Tokyo Lumber Terminal has secured 49,000 square metres of land as an emergency storage area reports the Japan Lumber Report (JLR). The Japanese Ministry of Land, Infrastructure and Transport disclosed that some 4,702 buildings were totally destroyed and 2,496 units half destroyed. In addition, 1,150 units are unsafe with a high risk of collapse.

Tropical plywood processing after quake
The earthquake and tsunami caused devastating damage to Ofunato Plywood mill which processed tropical hardwood logs from Southeast Asia. Other tropical plywood manufacturers experienced only little damage such as collapsed log and plywood piles. Plywood manufacturers are now trying to boost production which may push log prices up, reportsthe JLR.

Japan’s plywood market slowly getting back to normal
The JLR is reporting that the confusion in the plywood market immediately after the East Japan earthquake in March is now easing and that trade is slowly getting back to normal.

There was a period of panic buying of plywood by companies building house for delivery at the end of March but this is over now. There was also a period of aggressive purchases of imported plywood in the weeks after the earthquake and tsunami as many plywood producers in the quake hit area suffered damage.

This very active sourcing pushed up prices but now buyers are cautious and are not chasing high priced plywood. The market for imported plywood during March was chaotic with prices soaring but by April demand had cooled down. Concrete formboard JAS 3x6 panel prices were Yen 1,200 per sheet delivered, Yen 210-240 higher than early March prices.

Coated concrete formboard 3x6 panel was priced at about Yen 1,300, Yen200-230 up. Structural 12mm 3x6 panel (F 4star) is selling at around Yen 1,300 Yen280 up and firming. Imported thin panel of 2.4mm (type 2/F4star) is currently at around Yen380-400, Yen40-60 up. The supply of imported 4mm thin panel is currently extremely tight according to the JLR.

Log supply still a problem in Sabah and Sarawak
While the rain season is over in Sabah and Sarawak producers are saying that the weather continues to be unsettled and that this is hampering logging.

This is at a time when export demand in India and Taiwan P.o.C is strong. Malaysian plywood producers are feverishly sourcing logs. The JLR reports that Indian buyers are apparently tiring of the spiralling log prices in Sarawak and have started looking in Papua New Guinea for alternative species.

April FOB prices reported by the JLR indicate that Sarawak meranti regular log prices have increased to US$350 per cu.m and that Japanese buyers are expecting another round of increases. Small meranti log prices are said to be around US$330 per cu.m while super small logs are priced at US$315 per cu.m.

In 2010 the top buyer of Sarawak logs was India which imported some 2.2mi cu.m. China was second largest buyer taking 588,000 cu.m followed by Taiwan P.o.C with 477,000 cu. Japan was forth largest importer of Sarawak logs taking 370,000 cu.m.

In Japan, Sarawak meranti regular log prices in April were Yen 8,000-8,200 per koku CIF, Yen400-500 up form January. Some plywood mills have reportedly reduced purchases of high priced tropical logs and are increase the production of softwood plywood.

Tsunami devastated Ishinomaki and other coastal towns
It is now just over a month since the mega-quake in Japan and now it is possible to get a clearer understanding of the extent of the damage to the timber sector in the region. On the coast of Miyagi and Iwate prefecture, there are many major plywood mills. Around port of Ishonimaki, in the industrial area, there are three Seihoku plywood mills as well as particleboard and MDF plant.

These factories are the core of the Seihoku group’s wood processing capacity. There are also other mills such as the Ishinomaki Plywood, other sawmills and the Nippon Paper plant in the affected areas.

The tsunami breached the high sea defences and swamped the mills pushing plywood stocks into the factories and manufacturing lines. Apparently logs are scattered throughout the residential areas and recovery will be a problem as it is difficult to determine ownership. Even when the processing lines are restored the problem of erratic electric power supply will remain. Power substations have been destroyed and authorities say it will take 2-3 months for temporary substations to be established and even then the power available will be less than before the crisis.

Log and Sawnwood Prices in Japan