More on Timber Sector

The following article, Timber firms hit by slow demand was published on 29th Feb 2008.

• PETALING JAYA: The slowdown in Japan's housing construction sector has taken a big toll on the earnings of Malaysian timber companies.
  
  The profits of WTK Holdings Bhd and Lingui Developments Bhd fell sharply last year against that reported in 2006 due to poor demand for timber products from Japan, the key export market for Malaysian timber companies.
  
  However, the timber industry may be coming out of the woods, as there are nascent signs of recovery in demand, which has in turn pushed up prices.
  
  “The orders for plywood products picked up in February and prices are recovering.
  
  “But we don't expect a big jump in prices. It will be a gradual climb,” Ta Ann Holdings Bhd chief executive officer Datuk Wong Kuo Hea told StarBiz yesterday.
  
  According to him, the price of structured plywood increased to US$410 per cu m (month-on-month) compared with US$370 per cu m, the lowest level recorded in August-September last year. Prices peaked at US$560 per cu m in 2006.

Yesterday, RHB had a research report, saying that they reckon that perhaps the worst could be over.

• The worst could be over. Japan's imports of plywood have grown at an average of 6.5% p.a. over the last two consecutive months. This is due to the beginning of a gradual recovery in housing starts in Japan.
  
  Plywood prices are set to grow. YTD, concrete panel and floor-based plywood prices have declined 30% and 32% respectively. However, prices are expected to rise in April given some speculative purchases on the back of the recovery in housing starts.

So the key would be the gradual recovery in housing starts in Japan, yes?

If the Japan housing starts do not recover, then the chances of recovery for the local timber sector would be slim, yes?

Today, there's an article posted on Star Biz again, Japan housing starts fall at slower pace

• TOKYO: Japan's housing starts declined at the slowest pace in eight months in February, a sign that the world's second-largest economy is recovering from the building slump driven by a change in construction regulations.
  
  Ground broken on new homes and condominiums slid 5% from a year earlier after falling 5.7% in January, the Land Ministry said in Tokyo yesterday.
  
  A recovery in starts, which plunged to a four-decade low last year, may help Japan weather the fallout from the slowdown in the US, its largest export market. The housing slump wiped more than 1 percentage point from the nation's 3.5% annualised growth last quarter.
  
  “This confirms housing starts will stop damaging the economy,'' said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute here. “That's one big reason why Japan will probably avoid a recession.''
  
  The declines have been easing since September's 44% drop, which was the biggest since the government began keeping comparable figures in 1965.
  
  On an annualised basis, builders broke ground on 1.15 million new homes and condominiums, yesterday's report showed.
  
  Housing starts have mostly recovered, the government said in its monthly economic report for March.
  
  “We expect the economy to expand gradually with exports on a rising trend and the effect of the revised Building Standards Law having run its course,'' the government said.

How?