Good development for the Japanese wood chip market

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After FIT system (energy purchase system with fixed prices generated by renewable resources) started in July 2013, there are many projects of wood biomass power generation and many plans to start up in 2015 so that movements to purchase and collect wood resources for fuel have started in everywhere.

So far, majority of demand of wood chip has been paper and pulp manufacturing then biomass wood chip for power generation is totally new demand. Right at this moment, there is no place where wood chip supply is tight and the prices soar but locally wood biomass wood chip prices exceed that for paper manufacturing.

To prepare biomass wood chip demand, there are movements to collect low grade logs for fuel and to bring in portable wood chippers into the woods to produce wood chip for biomass generation.

Demand of wood chip for paper manufacturing has been recovering after a long time. Since late last year, orders for printing paper and card board increased before the consumption tax increase then by weakening yen, import of papers like copy paper decreases and export of paper increases, which stimulate paper production in Japan.

Accordingly demand of wood chip for paper manufacturing increases. Housing starts were active last year and sawmills were busy for lumber production, which generated more residue, which helped production of wood chip. Thus far, there is no panic of wood chip supply and demand but after many biomass power generation facilities start up, supply shortage will come for sure.

Importing wood chip from overseas resources is based on annual contract so that the volume is fixed and any increment demand of wood chip has to be fulfilled by domestic supply. The prices of imported wood chips are climbing. Softwood chip prices from the U.S.A. are 12% up compared to last October and softwood chip prices from Australia are 7% up. By weak yen, arrived cost is higher.