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Domestic demand for logs and sawn timber in New Zealand remains strong while the longer-term forecasts are uncertain. New Zealand sawmillers are “cautiously optimistic” about the future.

As expected, there were small increases in CFR log prices over the last month in China, but these increases were negated by increased shipping costs and the NZD strengthening against the USD. The overall impact was virtually unchanged AWG pricing for August.

The PF Olsen Log Price Index in August remains at $114. The index is currently $9 below the two-year average, $11 below the three-year average, and $9 below the five-year average.

Sawn timber markets

The current domestic demand in New Zealand is buoyant with good demand for a range of sawn timber grades. However, most economists predict a slowing in the housing market in New Zealand as the labour market weakens but this may not eventuate until nearer the end of the year.

The New Zealand government’s wage subsidy scheme and stimulation packages, coupled with deferrals on home loan payments, means we are yet to see the full impact of COVID-19 on sawn timber demand. But as these programs are wound back the underlying economic situation will be revealed, and this is when we expect to see a reduction in demand for homes and new builds. Further details of this can be seen in the latest ANZ Research Agri Focus Report in which then predict GDP to fall by 7-9% this year.

NZ’s exports of sawn timber are positive in the US and Europe. US sawntimber prices continue to increase as US sawmills struggle to keep-up with demand, while demand from Europe for New Zealand clearwood timber remains strong. Asian markets are still difficult for sawn timber sales due to supply from around the world.

New Zealand suppliers have managed to maintain price but have said they would like to be able to visit their markets to ascertain the situation and meet with their customers. Of all the Asian sawn timber markets, Thailand seems to be the most sluggish as they had a higher level of stock pre COVID-19 combined with having a high component of packaging. Once the economies around the world start to function normally this market should rebound strongly.

The post N. Zealand: Rising shipping costs impact prices of logs exported to China appeared first on Timber Industry News.