The CFR prices for New Zealand pine logs in China has increased approximately 5 USD over the last month and is still increasing.
The price for A grade logs is now around 158 USD per JASm3 and log exporters will continue to ask for increased pricing to compensate for increased shipping costs. Steady increases in log prices this year have been achievable to date as wholesales are still making a margin.
Softwood log inventory has climbed to 4.6m m3 as volume continued to arrive while China restarted after the Chinese New Year period. Daily port off-take is currently a healthy 70k and increasing weekly.
The China Caixin Manufacturing PMI fell to 50.9 in February. This is a relatively neutral score which predicts minimal change in manufacturing.
While output and new work eased the PMI was also affected by raw material shortages and transport delays increasing suppliers’ delivery times. (Suppliers’ delivery times makes up 15% of the PMI). Business sentiment strengthened with future output expectations jumping to the second highest since August 2014.
Increased shipping costs for New Zealand logs to China was mostly covered by increased CFR sale prices. There was little movement in domestic log prices as we come to the end of Quarter 1.
April AWG prices will be determined by the relative rises of log prices and shipping costs, while currency movement will also have an impact.
The PF Olsen Log Price Index remained at $130 in March due to the stable AWG prices. The index is currently $10 above the two-year average, $6 above the three-year average, and $6 above the five-year average.
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