30 Mar 2021

Forestry export prices reaching three year highs

4:50 pm on 30 March 2021

Prices have been on a strong run since November due to Chinese demand and a gap in supply, a forestry consultant and exporter says.

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Photo: RNZ / Susan Murray

Laurie Forestry managing director Allan Laurie said trade issues between Australia and China meant Australia was not sending logs there at present, and exports of spruce out of Europe were also lower.

He said it was unclear what was causing the European supply shortage but Covid-19 related workplace issues and a lack of shipping containers - which is how spruce is transported - were likely culprits.

Laurie, who is based in Canterbury, said this hold up in global supply was good news for New Zealand exporters and wood traders, and on the log exporting side CFR prices (the log prices landed in China in US$ per cubic metre) had continued to firm.

He said market fundamentals remained strong.

"We are seeing daily consumption rates run in excess of 85,000 cubic metres across the eastern sea board. That's very good for this time of year, post Chinese New Year.

"We're of course seeing them come into their spring and the construction sector is typically quite busy from about now on. That's building apartments and using our timber basically to hold up concrete. But that's good news for New Zealand exports across both lumber and logs.

"Just to put this in context, that means in five days the China market is consuming more logs than is exported out of the South Island in a month," he said.

Laurie said freight prices were exploding for both lumber from sawmills, and logs, with logs particuluarly hit.

"Our handy class vessels that come to New Zealand to take our logs to China have seen a signficant increase, in fact a 20 percent increase in March which is quite extraordinary. The freight rates we're now seeing come through for April are the highest I've ever seen in the 26 years I've been involved in log exports."

Laurie said this meant that despite log prices climbing to close to the highest levels ever, New Zealand would potentially see wharf gate prices (what growers get paid for logs) start dropping in April.

Meanwhile New Zealand's building industry is grappling with a shortage of timber - the forestry industry has said that's a processing issue and there are enough raw logs available.

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