New Zealand: Structural log prices hit highest level in 25 years

As New Zealand mills continued to compete with the export market to supply the domestic construction market as well as manage strong demand from China, the average price for structural logs rose to NZ$135 (US$91.15) per tonne, up from NZ$134 (US$90.50), the highest level seen since 1993, according to AgriHQ’s monthly survey.

Sawmills in New Zealand are competing against the export market for the local construction market, as demand in China, the largest economy in Asia, continues to rise in the wake of government legislation to limit the harvesting of forests and lowered tariffs on imported logs.

“Export markets have remained an enticing avenue for log traders and there is little to suggest this will change in the coming months,” Reece Brick, an analyst at AgriHQ, said to BusinessDesk. “China’s appetite for New Zealand logs means it’s still the price-setter for sales into other countries.”

He also noted that while the winter season has slowed harvesting in certain areas, many survey respondents reported firmer pricing in the market. Local demand for structural timber, however, softened due to caution in the housing sector.

“Whether or not harvesting remains disrupted in the coming weeks is unlikely to make much difference to the medium-term direction of the domestic sales,” Brick continued to BusinessDesk. “The pull of the export market is still pushing forest owners to try and negotiate contracts at or near the export market level. This is a situation that is very unlikely to change in the next few months.”

Although the volume of logs being moved from ports in China have dropped due to shorter working hours in the soaring summer temperatures, it coincides with the slower harvesting New Zealand is experiencing, keeping the market balanced, Brick observed.

In New Zealand, forest products are the third-largest commodity export group.

 

Source: BusinessDesk