NZ export log prices hit new record on strong Chinese demand

Tuesday 30th January 2018

New Zealand export log prices advanced to a new record, driven by continued strong demand from China, lower shipping rates and a favourable currency.

The price for A-Grade export logs lifted to $131 a tonne from $129/t last month, marking the highest level since AgriHQ began collecting the data in 2008, according to the agricultural market specialist's monthly survey of exporters, forest owners and saw millers. The average export price for pruned logs jumped to $176/t from $170/t last month and marking the highest level since July 2016, AgriHQ said.

New Zealand is experiencing strong demand for logs from China, which has clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market. AgriHQ said Chinese demand for logs remains high, with a record total of 2,903,943 tonnes imported in November, up 20 percent on October levels and 10 percent above the same period a year earlier.

"Strong demand has had China continue to import significant quantities of logs," AgriHQ analyst Reece Brick said in his report. "China continues to be NZ's major destination for log exports, making up 83 percent of NZ's total log exports in November."

Brick noted exports to China in the year to November 2017 were up 16 percent compared with the entire 2016 calendar year. Export data for the December month is due to be released today.

In other markets, exports to Japan were also strong, up 30 percent from year earlier levels, while exports to India were down 13 percent, he said.

Ahead of AgriHQ's log price survey, the market was bolstered by higher in-market prices, a fall in shipping rates, and the New Zealand dollar holding below 70 US cents, he said.

In the New Zealand domestic market, pricing was generally flat compared with the previous month for all log grades with the national average for structural logs at $129/t, pruned logs at $182/t and roundwood at $97/t.

Still, Brick said the recent flatness is not an indicator of the longer term trend, with all reports suggesting first quarter contracts have lifted by as much as $5-$7/t for higher value unpruned logs, especially through the central North Island.

"The usual combination of exceptional export pricing and solid domestic demand have been quoted as the main drivers behind these increases," Brick said.

He noted there was a smaller portion of pruned logs moving into the export market, and prices for both pruned logs and pulp were expected to be mainly unchanged in the first quarter.

(BusinessDesk)

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