New Zealand export log prices rose this month as the benefits from declining shipping rates offset dwindling Chinese demand reports BusinessDesk.
The average wharf-gate price for New Zealand A-grade logs rose to $122 a tonne in February, from $115 a tonne in January, according to AgriHQ’s monthly survey of exporters, forest owners and saw millers.
According to BusinessDesk, low oil prices bolstered exporters’ receipts from logs in New Zealand, with AgriHQ this month recording a record low shipping rate to China of US$14.30/JAS – a benchmark measure.
That more than made up for a drop in the in-market price of A-grade logs in China, New Zealand’s largest market, which fell to US$111/JAS from US$117/JAS last month.
Log inventories on Chinese ports rose to about 2.6 to 2.8 million cubic metres, from 2.4 million cubic metres following a slowdown in activity during the Chinese New Year holiday period.
“Shipping rates have fallen even further, due to the extremely low price of oil throughout the world,” says a report by AgriHQ analyst Emma Dent.
“With shipping rates expected to remain low, and potentially drop further, we will likely see wharf-gate prices maintain these higher levels, if not increase in coming months.”
Log inventories on Chinese ports are expected to climb to about 3.5 million cubic metres before declining again, a lower peak than in previous years due to the timing of the New Year holiday, says Dent
She says that some exporters were seeking to raise prices in China, although there is uncertainty over whether the hikes will be accepted in the market.
Meanwhile, in the New Zealand domestic market, the average pruned log price rose to $176 a tonne from $168 a tonne last month, marking the highest level since December 2002, says AgriHQ.
In the central North Island, where demand is outweighing supply, the average price jumped to $182 a tonne from $173 a tonne, with reports some plywood mills were paying as much as $300 a tonne.
“This type of activity has led to some central North Island mills sourcing logs from Northland, as it is cheaper to transport these logs than it is to source locally,” says Dent.
“Though transactions are occurring at these very high levels, most trading has been completed in a more stable range.”
Still, the shortfall in availability is expected to continue for some time, with record prices expected, she says.
Structural log prices rose to $109 a tonne from $103 a tonne last month, marking the highest level since August 2014 as demand outweighs supply with prices expected to increase by the end of the first quarter, says Dent.
Pulp prices are expected to soften when woodchip volumes increase at a new plant in the central North Island approaches maximum production capacity, she says.
Forestry products are New Zealand’s third-largest commodity export group behind dairy and meat products. The latest trade data for January is due out on Friday.
