April 15 (Bloomberg) -- Japan’s lumber industry, which imports 80 percent of its supplies, may buy more timber from the U.S., Canada and New Zealand after an increase in export taxes slashed Russian shipments by 55 percent.

“Imports from North America and New Zealand will increase as supply from Russia is unreliable,” Akira Sekimoto, general manager at Tokyo-based Sumitomo Forestry Co., said in an interview yesterday. The company is the biggest owner of forests in Japan and the nation’s largest builder of houses using timber.

Increased demand for North American supplies may help support Chicago lumber prices, which dropped 27 percent in the past year. Shipments from Russia, Japan’s largest source of logs in 2007, slumped after an export tax increased twice in less than a year to 25 percent and the country said it planned to boost the duty to 80 percent. The cost of using alternative timber may force some processors out of business.

“We want to revive the domestic timber business but that won’t replace all the current demand for Russian supplies, so imports from other countries will naturally increase,” Toshiyuki Akagi, director at Japan’s Forestry Agency said.

Residential building is the main use of lumber in Japan. About half the country’s houses are constructed using wooden posts, beams or paneling, according to the Ministry of Land, Infrastructure and Transport.

Russian Trees

Russian timber is favored because of its price and strength, according to processors. The trees, often hundreds of years old, supply wood with a smoother texture than lumber from more recent forests in Japan and North America.

Imports from Russian dropped to 1.81 million cubic meters in 2008 from 4.04 million cubic meters a year earlier as total timber imports dropped 33 percent to 5.96 million cubic meters, according to the Forestry Agency.

Shipments from North America fell 8.3 percent to 2.73 million cubic meters and supply from New Zealand rose 3.5 percent to 842,000 cubic meters. China’s imports of Russian timber last year fell 28 percent to 18.6 million cubic meters, according to Tokyo-based trading company Sojitz Corp.

In Toyama Prefecture, Japan’s biggest regional importer of Russian timber, about 10 percent of an estimated 300 processors may go out of business because of the cost of sourcing alternative supplies and retooling machinery, according to Ryoichi Takano, an official at the Wood Industry Association of Toyama. “There isn’t much we can do to cope,” he said.

Budget Assistance

Japan has allocated 500 million yen ($5 million) in the budget year started April 1 to provide assistance for small and medium-sized lumber processors.

Russia’s export tax on unprocessed timbers increased to 25 percent last April after rising to 20 percent in July 2007 from 6.5 percent, Russia’s Federal Forestry Agency said on its Web site. Plans to further raise the rate to 80 percent in January were delayed by up to a year by the government.

Sojitz, Japan’s second-largest timber importer, in 2006 established a wood veneer processing venture in the eastern Russian city of Komsomolsk-on-Amur with Flora Joint-Stock Co. The project is yet to start production amid uncertainty over export tax levels.

Processing wood in Russia for shipment to Japan “won’t be competitive” without tariffs of 80 percent, Satoru Yasuda, a marketing department manager at Sojitz said.