Japanese sawmills processing domestic timber in the Northern Kanto worked at 70% capacity in September, which was sufficient to meet current demand. Domestic inventories decreased, but remained high still. Some pre-cutting factories saw growing orders, though the trend is very uncertain. Orders for sugi (Japanese cedar) lumber increased in the Kanto region, which even experienced a log shortage due to pest damage and an August typhoon destroying forest roads.
Despite these localized increases, prices remain under pressure. Chugoku Lumber has made a ¥5,000/m³ price cut for its dry beams. Non-precut industries remain sluggish. Sugi and hinoki (Japanese cypress) KD structural lumber is in plentiful supply. KD 3 m x 105 mm sugi stud is priced at ¥58,000 – 60,000/m³. Demand is higher for side boards than for core materials, making sawing operations harder for mills.
Excess imports
The inventory of imported timber in Japan has been accumulating throughout 2024. European timber stocks increased again in September due to excess arrivals in late August. At Tokyo Lumber Wharf, inventories of spruce mabashira (vertical posts) have surged, causing the market to cool down. Negotiations with European suppliers for Q3 shipments have been difficult, and a similar situation is expected during Q4 talks, with euro prices rising in response to the stronger yen. However, European suppliers are not in a rush to sell and are reducing their reliance on the Japanese market.
Selling small American Douglas fir dimensions remains a challenge due to persistently low demand and overstocking. Southern Yellow Pine prices remained stable in September at $940 per thousand bf ($398/m³). U.S. hemlock and spruce are expensive, resulting in minimal market movement for these products.
The price for Russian planed pine remains strong at $600/m³. Some shippers are even discussing price increases due to the yen rate. Inventories are excessive for some products like planed taruki pine, but domestic factories processing lower-grade genban pine face procurement challenges due to limited offers and container shipping issues. In August, Russian lumber offtake from Tokyo and Kawasaki ports reached a historic low of 9,000 m³.
Major wholesalers raised Chilean radiata prices by ¥3,000/m³. Thin radiata lumber in Kanto now stands at ¥60,000/m³, but demand for radiata crating is currently inactive.
Orders received by domestic glulam mills are at 60-70% of 2023 levels. In retail, there is steady demand for pine glulam. The median price for domestic pine and spruce structural glulam rose by ¥2,000-3,000 to ¥75,000-76,000/m³ in late August.
Renovations and non-residential remain brighter spots
Starting from mid-summer, housing companies have seen some modest growth in orders, with rental housing being more active. Companies also see positive results in renovation, which is supported by renovation subsidies. A survey by the Ministry of Land reveals that renovation orders value in Q2 2024 grew by 10.6% year-on-year, with its non-residential segment gaining 13.8%. The use of solid wood is increasing in non-residential projects such as stores and nurseries.
In its Q4 demand survey, building materials trader Japan Kenzai shows a continued decline in housing starts sentiment, though there are signs of improvement in central prefectures. The survey shows a poorer forecast for plywood sales but improvements in other building materials.
