“Challenges facing the New Zealand timber industry are real and significant but the industry is generally in a good demand cycle and sentiment is positive,” New Zealand Timber Industry Federation (NZTIF) president, John McVicar, said.
“Domestic demand for timber is very strong at the moment” he said. “However the upside was tempered with a number of very real challenges facing the industry.”
According to McVicar, as log supply shortages are chronic in some of the regions such as Canterbury and Northland, change isn’t apparent in the immediate future. The log shortages are due to export demand in China, dairy conversions, and wind storms, which have reduced the availability of forest resource to local mills and pushing log prices up significantly. These cost increases have yet to be fully passed on and recovered in the market.
“Timber exporters are struggling with the strong NZ dollar and exports to most markets are hard to make work. It is only the strong local market, driven by record high immigration that is providing some stability, at a time when many export markets for sawn timber are marginal,” McVicar said.
Despite these challenges and others, there is still new investment going into the industry, more so in areas where log supply was not constrained, and the overall annual sawn timber production for the country had actually increased.