Market in Japan and USA

Japan

Södra has growing markets in Japan both for house construction timber and the DIY sector. Strength is the main requirement for the former and appearance is the key attribute for the latter. There have been approximately 800,000 housing starts in Japan during the past year, and around 13 percent are based on timber-frame construction.

Södra is Japan Agricultural Standards (JAS) certified for 2x4 and 2x6 timber, which is a benchmark requirement for supplying the country with wood. But what gives Södra a foothold in a market so dominated by Canadian exports?

That domination is part of the explanation. Japan’s reliance on Canada as a source of timber exposes it to Canada’s tactical decisions regarding shipments. During the pandemic, for example, Canada switched considerable volumes to its southern neighbour, the USA. This experience has incentivized Japan to seek more volumes from Europe in a strategic bid to reduce its reliance. The high quality of European timber is another strong pull factor and Södra has a specific advantage with its planed timber capacity.

The fact that shipping from Canada takes a fraction of the time required to ship from Europe, and with fewer geopolitical risk factors en route, will always give Canada the upper hand. But Södra is seeing steady demand from Japan despite widely-published data concerning decreased housing starts compared with 2024, which suggests Södra is gaining market share.

USA

Housing starts in the USA are proceeding at an annualised rate of some 1.35 million units which is ahead of expectations. Beware of making comparisons with Japan’s annual rate of 800,000 units. The difference is greater than it seems, because houses are generally much bigger in the USA than in Japan, so the same number of housing starts in the USA, where timber-frame is particularly dominant, will consume much more timber than the equivalent in Japan.

The potential in the US market is already reflected in the fact that timber attracts higher prices than in Europe currently. Mortgage rates are already falling and the anticipation of prime-rate reductions is fuelling optimism that demand in the house-building sector will rise.

The USA has an ongoing housing shortage, so demand will always be ready to take advantage of beneficial conditions for building.

Southern yellow pine is well accepted as a construction material in the USA but spruce from Södra offers advantages: it is lighter to transport, easier to nail and drill, and of high quality, so it particularly appreciated in the market.