New Zealand’s forestry exports are expected to increase 8.1 percent due to strong demand for logs from China and robust demand for sawn timber from the US.
Growth in the Chinese construction industry and the US housing market is expected to support demand for our key forestry products over the medium term. In addition, domestic timber demand is expected to remain strong due to increased residential construction.
Looking into New Zealand log export sector
Log export revenue fell 24 percent during 2020, largely due to COVID-19 related disruptions to harvesting, logistics, and demand. China remains the key market for New Zealand log exports, making up 82 percent of overall log export values.
Log exports are forecast to reach $3.2 billion in 2021, up 12 percent from 2020 but well below 2018/19 values when prices and volumes reached all-time highs. Chinese demand for logs remains strong, driven by increased construction activity. Demand for logs is expected to continue over the medium- term if China’s construction industry remains strong.
The outlook for log prices is less clear despite strong demand signals from key markets. European foresters have been sending increased volumes of spruce logs into China in response to a spruce beetle infestation, which is likely to put downward pressure on New Zealand log prices. On the other hand, a planned ban on Russian log exports in early 2022 is expected to support demand (and prices) for New Zealand logs in the medium term.
Demand from South Korea, our second largest market for logs, is forecast to be relatively stable over the forecast period. Demand from India is expected to remain subdued for the remaining part of the year as COVID-19 cases decline, but it is expected to increase as its GDP growth rebounds.
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