Domestic demand for logs and sawn timber in New Zealand remains strong with regional differences in log supply and demand due to previous mill closures, and increased harvest volumes in the better weather conditions.
According to a interest.co.nz report, the October At Wharf Gate (AWG) log prices received by New Zealand forest owners increased by NZ$4-5 per JASm3 from the September prices. Demand for logs remains strong in China driven by domestic consumption for construction, however China’s export markets for furniture and other wood products remains weak, interest.co.nz reports.
Due to the increase in export log prices and domestic structural prices the PF Olsen Log Price Index increased by NZ$3 in October to NZ$119. The index is currently NZ$3 below the two-year average, NZ$5 below the three-year average, and NZ$4 below the five-year average. For the last three months the index has tracked along the same path as the corresponding period last year.
According to interest.co.nz, the balance between log supply and demand is varied around the country. Most regions in the North Island and the lower South Island have an excess of supply and particularly non-FSC logs. Nelson and Christchurch have a shortage of structural logs, but sufficient pruned logs. Prices for structural logs have increased by $2-$4 per tonne in Northland and the South Island.
Domestic demand for both industrial and structural sawn timber in New Zealand is strong and remains well ahead of predictions. There is usually a quiet period leading up to a general election in New Zealand as people delay projects to see what the new regime may bring. This year the domestic demand for sawn timber has remained strong. The very low interest rates and a higher number of expatriate New Zealanders returning to New Zealand has driven demand.
New Zealand exports of fibreboard to China fell 27% in the first half of 2020. This is explored further later in this article. Export markets are still relatively strong. The clearwood demand in Europe remains strong despite uncertainty due to Covid-19.
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