The average price for structural S1 logs increased to $135 a tonne this month, from $134 a tonne last month, and marking the highest level since 1993, according to AgriHQ’s monthly survey of exporters, forest owners and saw millers.
The average price for NZ A-grade export logs hit a four-year high of US$145/JAS from US$144/JAS last month and US$132/JAS a year ago.
Local sawmills are competing with the export market to source logs for local construction at a time when demand in China has stepped up after Asia’s largest economy clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market.
“Export markets have remained an enticing avenue for log traders and there’s little to suggest this will change in the coming months,” AgriHQ analyst Reece Brick said.
“China’s appetite for NZ logs means it’s still the price-setter for sales into other countries.”
Nearly all AgriHQ survey respondents reported steady or marginally firmer prices across structural S1 logs.
The winter weather had slowed harvesting in some areas but came at an opportune time as some North Island mills experience softer-than-expected local demand for structural timber because of caution across the housing sector, he said.
“Whether harvesting remains disrupted in the coming weeks is unlikely to make much difference to the medium-term direction of the domestic sales.
“The pull of the export market is still pushing forest owners to try to negotiate contracts at or near the export market level.
“This is a situation that is very unlikely to change in the next few months.”
The volume of logs being taken from Chinese ports has slowed as a result of shorter working hours because of hot summer temperatures, however, that isn’t uncommon at this time of year and coincides with slower harvesting in NZ, which should keep the market in balance in coming months, Brick said.
Forest products are NZ’s third-largest commodity export group behind dairy and meat products. Trade data for May is due out on Wednesday. – BusinessDesk
