Influences on Japanese demand for wood products
- Wood use in Japan stems mostly from residential construction, which rivals the United States market in terms of number of housing starts, and presents tremendous market opportunities for overseas producers of structural wood products.
- Post & beam type of construction dominates, but markets for North American-style platform-frame construction are steadily growing.
- Several trends related to wood use are driving the demand for structural wood products in Japan, including the growing importance of high-performance, aesthetically pleasing wood products, the adoption of platform-frame building technologies and engineered wood products, and the emergence of a pre-cut component manufacturing sector.
- Changes are under way in the markets for non-structural wood products for interior applications as Japanese consumer tastes shift towards the use of lighter coloured softwoods and western styles.
- Changing demographics (population stability and an increasing proportion of elderly persons) are having an impact on the use of wood in Japan.
- Changes in regulatory requirements regarding housing in Japan, including the Government Housing and Loan Corporation, the Building Standard Law and the Housing Quality Assurance Law, will have a considerable impact on wood products imports and business relations.
- The future of wood product imports to Japan will be characterized by further global competition, the potential for increased trade protectionism, the need for high performance wood products and systems, and growth in the repair and remodelling market.
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Wood raw material – production, trade and consumption
- Roundwood was in oversupply in Europe in 2000 following the extensive windthrow from the December 1999 storms, which mainly affected France, Switzerland, Denmark and Germany.
- The storm damage had these effects on roundwood markets in the EU/EFTA subregion in 2000: an acceleration of production and exports by 12% and 50% respectively, a 30% drop in prices, and a 19% increase in net imports.
- Despite the surplus windthrow volumes in 2000 in western Europe, exports of wood raw material to western Europe from CIS as well as from central and eastern European countries increased rapidly by 13% and 8% respectively.
- A change in traditional roundwood trade flows is occurring in the UNECE region as evidenced by a significant decrease in Germany's net trade with countries of the EU/EFTA subregion owing to a sharp increase in roundwood imports from the CIS since 1995.
- Roundwood production and consumption in the CIS increased significantly, by nearly 60% from 1998, although it had decreased annually since the beginning of market reforms.
- Incomes from expansion of roundwood exports from CIS and “Other Europe” countries are increasingly used to improve obsolete machinery leading to increased productivity and medium-term domestic purchasing power.
- While the United States lost some market share in Japan, industrial roundwood trade between the United States and Canada is increasing.
- Production and consumption of roundwood in the UNECE region both rose almost 5% in 2000, to reach 1.3 billion m3 in 2000, mainly because of the storm damages in Europe; however, removals remain still well below the supply potential of the forests.
- Roundwood exports and imports both increased in UNECE region in 2000 by roughly 18%, while net exports expanded same time by 22%.
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Sawn softwood – consumption, production and trade
- In 2000 in the UNECE region, production of sawn softwood reached a new high of 264 million m3, a 1.6% increase over 1999.
- Nordic countries’ production and exports were at record highs in 2000, and shipments of further processed sawn softwood products are increasing.
- Nordic countries' and Austria continue to see growth in exports of sawn softwood outside of the EU/EFTA region, especially to Japan.
- Growth in exports from central and eastern Europe, 13% from 1999 to 2000, is considerably higher than the export growth rate in the EU/EFTA subregion of Europe of 4%.
- Sawn softwood exports from Canada to the United States made record highs in 1999 and 2000, representing roughly 35% of total United States consumption.
- Canadian exports of further processed sawnwood products, including wood furniture, reached record levels in 2000.
- United States exports of sawn softwood continue near their decade lows of 1998, at less than 3 million m3, due to increased domestic consumption and reduced production.
- United States imports from South America and Europe are at record levels.
- Expiration of the Canada – United States Softwood Lumber Agreement in March 2001 has created much apprehension for Canadian producers, leading to a drop in shipments and higher prices.
- While Japanese import volumes of sawn softwood remain considerably below the 1997 peak of over 10 million m3, Japan remains an important market for supplier regions around the globe. Canada has maintained market share in Japan, while the United States lost market share, and Sweden, Finland and Austria enjoyed spectacular gains.
- Sawn softwood production and trade increased sharply to record levels in France, Germany and Switzerland following the December 1999 windstorms and sawnwood prices weakened.
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Sawn hardwood – consumption, supply and trade
- Consumption of sawn hardwood in the UNECE region continued to rise to an all-time record through 2000, driven by improved economic conditions, particularly in the United States.
- Sawn hardwood production in the UNECE region increased by 4.1%.
- Sawn hardwood production in the United States reached an all-time record level in 2000 but, based on early reports, may have fallen by up to 25% in the early part of 2001.
- Trade in hardwoods was at record levels in 1999 and continued to accelerate during most of 2000 throughout the UNECE region.
- Prices of logs and sawnwood produced in the region advanced, although much more so in North America where the domestic and export demand was exceptionally strong and only towards the end of 2000 showed any sign of easing.
- European production of sawn hardwood in 2000 responded to increased demand and improved prices and swelled with the recovery of storm-blown timber at the beginning of the year and demand from Asia.
- Eastern Europe emerged as a more significant supplier of sawn hardwoods greatly assisted by the continued strength of the dollar and weakness of the euro currency.
- Globalization of hardwood markets continued to play an increasingly important role, well demonstrated by the influence of such countries as China in the global supply and demand equation.
- Rationalization in the furniture industry within and outside the UNECE region is changing the supply and demand profile for sawn hardwood.
- The first half of the 2001 market saw a sharp downturn in demand levels and prices in North America and Europe.
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Wood-based panels – supply, trade and consumption
- Panel markets in the UNECE region out-performed all other forest products market sectors in 2000.
- A price collapse hit the structural panel markets in North America and Europe in 2000.
- In the EU/EFTA countries, total consumption of wood-based panels increased 6.7% to a record high of 45.2 million m3, confirming the recovery of the sector.
- In the Russian Federation, consumption of wood-based panels was up by 19.3% and reached 3.6 million m3, confirming the recovery of the sector.
- Although North American structural panel prices staged a rebound in the spring of 2001, the economic recovery of the sector is overshadowed by sluggish demand and further capacity additions.
- In 2000 and 2001, a strong dollar disadvantaged North American structural panel exporters vis-à-vis European and South American suppliers.
- High profits in oriented strand board (OSB) in the past and predictions of further gains in market share vis-à-vis plywood have induced North American and European interests to build more capacity, fostering conditions of oversupply.
- OSB market share in North American commodity sheathing (for roofs, floors, and walls in homes) passed the 75% level at the expense of softwood plywood.
- Future market growth of OSB in North America is increasingly predicated on gains in residential remodelling, do-it-yourself purchases and other non-housing applications.
- European OSB production rose about 20% from 1999 and four more plants are being built.
- Turnover in capacity is occurring in all branches as newer, high-capacity plants drive out older, smaller operations with higher unit costs.
- European particle board markets are recovering as new capacity is absorbed and several older plants are phased out.
- European production of MDF rose by 15% in 2000, but capacity growth will ease in 2001 following major expansions.
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