Behind the changes in Japanese hardwood imports, the hard work of the home industry

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In 2019, slow economic growth and rising wages could not drive significant demand. Hardwood exports to Japan appear to be related to the country’s overall economic health, and it has been stagnant. Before the construction of the Olympic Games in Tokyo in 2020, the hardwood industry may have made some gains in exporting to Japan.

In 2018, the export of American hardwood sawn timber to China and Vietnam attracted great attention from the industry —— it is well understood that shipments to China have fallen sharply from record highs. Shipments to Vietnam have risen to record highs. However, from the point of view of the rise and fall, as of the end of September 2018, shipments to Japan in the five largest Asian markets showed the largest decline (-15%). Judging from the current pace of exports, the export of hardwood sawn timber to Japan in 2018 will be the lowest in nearly eight years.

Perspectives

From the late 1970s to the early 1980s, Japan was the main market for American hardwoods in Asia. During that period, the annual shipments to Japan were generally higher than those for Taiwan. Shipments in Hong Kong, China and Malaysia. Since the 1980s, annual exports to Japan have doubled every few years, but in the next 10 years, it has fallen sharply. In 2000, China’s purchase of hardwoods in the United States exceeded Japan’s; in 2004, Taiwan’s purchases were close to shipments to Japan; in 2006, shipments to Vietnam exceeded shipments to Japan.

Use of hardwood sawn timber

According to the US Department of Agriculture’s Overseas Agricultural Service Center, the country’s domestic hardwoods account for only 5% of their annual total use, so the country relies heavily on Hardwood sawn timber overseas. About 70% of American hardwood sawn timber exported to Japan is used to produce furniture, while the other 30% is used to produce flooring and other specific uses. For Japan’s hardwood imports, the United States is the second largest exporter after Malaysia and ahead of China (US Department of Agriculture’s Overseas Agricultural Service Center, Japan’s Ministry of Agriculture, Forestry and Fisheries).

Major tree species ratio change

The ratio of the main tree species shipped to Japan by hardwoods in the United States has changed over time. For example, as of the end of September 2018, Walnuts accounted for 25% of Japan’s shipments are ahead of all other tree species. But 10 years ago, Walnut only accounted for 13% of all shipments to Japan, behind white oak, red birch, and ash, only slightly ahead of Liriodendron and Maple.

Walnut

In 1988, US walnut exports to Japan reached a record 24,000 m3 (10.2 million board feet) (the US exports to Japan were also refreshed) Record), but it shrank in the second year, and in the next 22 years, it only exceeded 10,000 m3 (4.2 million board feet) a year. But since 2013, annual shipments have remained above 10,000 m3 (4.2 million board feet). At the beginning of 2018, Walnut’s shipments to Japan declined, but there was a rebound in summer and autumn. By the end of September, total shipments increased by 7% from the same period in 2017.

White Oak

In the mid-1980s, US white oak exports to Japan steadily rose, then rose in the early 1990s, reaching 63,000 m3 in 1997 (27 million board feet). ). In 1997, white oak was the most exported species of wood from American hardwood species to Japan, accounting for 25% of all US shipments. In the same year, only red birch and “other temperate tree species” were slightly closer to the amount of white oak exported to Japan, while the total shipments of maple, cherry, birch, hickory and eucalyptus to Japan accounted for only 11%. But in 1998, white oak shipments shrank sharply and have been declining for the next 10 years. In 2009, its shipments fell to a 24-year low of just 4,000m3 (1.7 million board feet), but rebounded to 12,000m3 (5 million board feet) by 2017. As of the end of September 2018, white oak exports to Japan fell by 23% (mainly due to the decline in purchases in the first quarter).

Ash Wood

In 1988, ash exports to Japan reached a peak of 95,000 m3 (40 million board feet), but since then it has tended to decline sharply. Between 1989 and 1999, its average annual shipments to Japan were 40,000 m3 (17 million board feet), and then between 2000 and 2010, it fell to an average of 9,000 m3 (3.8 million board feet). Since then, exports to Japan have risen slowly, reaching a new high in 13 years in 2014. In the following two years, the shipments of ash to Japan fell slightly, and then rose slightly in 2017. In 2018, Ashwood’s monthly shipments to Japan went up and down, peaking every three months, but shipments to date this year have dropped 19% from the same period in 2017.

Red Oak

In the late 1980s, US red oak exports to Japan also peaked at 178,000 m3 (75 million board feet). At that time, the average annual growth rate of the Japanese economy reached 5%, and several industries including the construction industry were recovering (Wikipedia). But this shipment is unusual. In the previous four years, the export of red oak to the country averaged only 35,000 m3 (15 million board feet) per year. Like ash, red oak has also shrunk dramatically over the past 30 years. Between 1989 and 1999, Red OakThe average annual export of wood to Japan is 29,000 m3 (12 million board feet), and the average annual export for the next 10 years is only 2,700 m3 (1.1 kcal feet); in the past few years, the export of red oak to Japan was slightly The rebound reached a new high in 17 years in 2014, but its shipments to Japan fell by 9% in 2017. As of the end of September 2018, total shipments fell by 16%, the lowest in 18 months.

Liriodendron chinense

In the late 1980s, the export of Liriodendron chinense to Japan was stable, but since then it has tended to decline. In 2008, the record low was only 3,800m3 (1.6 million board feet). In 2017, the share of American hardwoods in Japan’s hardwood exports to Japan fell by 5 percentage points from the 1990s, and fell to the bottom like red birch and cherry wood. In the first half of 2018, compared with the second half of the year, the export of Liriodendron to Japan is better. The shipment in September is the second lowest this year. It is only better than February, and September is the least monthly shipment to Japan. . As of the end of September 2018, shipments of Liriodendron to Japan fell by 6%, and have been declining since May.

Hard Maple

In the early 1980s, hard maple was one of the most exported wood species from Japan to hardwood sawn timber, but this trend did not last long. For example, in 1997, hard maple ranked sixth in the wood species that exported the most to Japan, and 10 years later, it still ranked sixth in the wood species that exported the most to Japan. In 2017, hard maple ranked 8th among the most exported species of wood to Japan, and shipped slightly more than cherry wood to the country. Although the number is still small, shipments to Japan in 2018 were the strongest in almost four years. As of the end of September 2018, its total shipments increased by 4% compared with the same period in 2017.

Cherry Wood

Cherry wood shipments to Japan have been small and never reached 6,000m3 (2.5 million board feet) per year. Two of the three largest annual shipments occurred after 2013, but shipments to Japan in 2018 were the strongest ever, indicating that Japan’s demand for it will increase in the future. In September 2018, the US Department of Agriculture’s Global Agricultural Information Report made a similar forecast. The report believes that cherry wood is increasingly recognized in Japan, and its consumption is expected to increase in the next few years.

Economic Drivers

Gross Domestic Product (GDP)

As the Japanese economy struggles, its demand for American hardwoods is declining, but Japan is still The world’s third largest economy. According to the focus-economics.com., in 2018 and 2019, the Japanese economy is expected to grow at only 1%, and by 2020 and 2023, the average growth rate is expected to be only 0.6%. .

&nbspquo;The Economic Focus website believes that analysts called the 1990s Japan’s lost 10 years, when economic growth clearly fell from the strong 80s. Japan has a huge budget deficit and is investing in large-scale public works projects to try to stimulate economic growth, but with little success. After that, the Japanese government embarked on many structural reforms aimed at reducing speculation in the financial market, and at the same time causing Japan to fall into deflation many times.

Employment and wages

Since 2009, Japan’s unemployment rate has been slowly declining, reaching 2.3% in September, compared with 2.4% in August. At present, the unemployment rate in the country is less than 1%, which is due to the concept of lifelong employment (large enterprises), but lifelong employment is not a law. The Wall Street Journal reported that as the unemployment rate fell, the idea was put to the test, and workers have been changing jobs more frequently to seek higher salaries and shorter hours of work. In September 2018, wages for workers rose by 1% compared to the same period last year. It is expected that there will be an increase of about 1.5% in 2019 and 2020.

Prospects

In 2019, slow economic growth and rising wages could not drive significant demand. Hardwood’s exports to Japan appear to be related to the country’s overall economic health, and it has been stagnant. before. Before the Olympic Games in Tokyo in 2020, the hardwood industry may have made a profit in exporting to Japan. It can compensate for the loss caused by a 2% increase in the country’s consumption tax. The tax rate is scheduled to be implemented in the fall of 2019. . The last time Japanese consumers were exposed to higher consumption tax rates (2014), there was a brief recession in the country’s economy, and hardwood exports to it fell in the two years after the tax rate escalation.



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