Japanese timber prices are on the rise again

July 25, 2022

TOKYO – Timber prices soar following Russia’s invasion of Ukraine. The shortage that began last year was exacerbated when Russia stopped exporting some of its timber to Japan in retaliation for sanctions Japan imposed on Russia.

Prices for plywood and lumber have risen 10-20% over the past three months, driving up housing prices. Some in the industry believe it to be a “timber shock”, a global spike in timber prices caused by a dwindling supply of timber.

The term wood shock has been equated with the oil shock of the 1970s. The first wood shock occurred in the first half of the 1990s, when the environmental movement gained momentum in the United States.

The second timber shock occurred in the 2000s when logging was restricted in Indonesia. The third is believed to be last year’s lumber price spike, caused by a strong recovery in U.S. housing demand that had waned amid the COVID-19 pandemic.

Chinese competitors

“Some lumber prices have risen more than in last year’s lumber shock,” Ichijo-lumber Co. Chairman Tatsuo Ichijo said recently. “The weak yen and rising logistics costs are also causing problems.”

Ichijo said his Tokyo-based company, which imports lumber, often loses out to companies in China, where housing demand is strong. Its supply volume has fallen to around 30% of previous levels.

Since there are no measures to alleviate the situation, Ichijo said, “We have no choice but to endure the current difficulties.”

Prices for lumber and wood products soared 43.4% in June from the same month last year, according to the Bank of Japan’s preliminary business goods price index.

weak yen

Prices for lumber and laminated wood products, which had been falling this year, started to rise again after the Russian invasion and returned to the same level as at the end of last year.

Lumber is made by processing cut trees into squared timber or planks, which are used for a variety of purposes. Glued laminated timber, which is made by laminating multiple boards together to increase strength, is often used for structural elements in buildings such as columns and beams.

The price of plywood and logs is steadily increasing. Since about 60% of the wood consumed in Japan is imported, the weak yen also pushes prices up.

Russia is one of the main timber exporters. In 2020, it exported around 20% of the world’s lumber. After its invasion of Ukraine, Russia stopped exporting logs, single-ply panels and other products to Japan and other countries it identified as “hostile nations”.

In addition, an international forest certification organization suspended the certification of Russian timber in early March, which led to a decrease in distribution volume.

Russian wood is grown in cold regions and is suitable for habitation because its fine grain makes it difficult for nails to fall. A senior housing company official said an alternative could not be easily found.

Moving Costs

There are measures to increase housing prices in Japan.

In January, Daito Trust Construction Co. raised the price of its homes by 2%, and a company official said it may have to consider further increases. Sumitomo Forestry Co. said it was also “in a difficult situation and revising its home prices as necessary.”

In these circumstances, attention turns to the use of domestic wood. After World War II, Japan planted trees to meet the rapidly increasing demand for wood. Currently, planted forests account for 40% of the country’s total forests.

Forest resources such as cypress and cedar have increased by about 60 million cubic meters every year. Hirofumi Kato, president of Mitsubishi Estate Home Co., said, “We want to use domestic wood as much as possible.

According to the Forestry Agency, however, there is no system in place for the production, distribution and processing of domestic wood in large quantities.

Small and micro loggers make up 90% of the industry, and the number of workers continues to decline. There are supply issues that need to be resolved for homebuilders to continue using wood on a large scale.

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