NZ Forest Products – October 2019 Monthly Market Report

As we head towards summer, log prices have rebounded slightly on an upward movement and are back within 85% of the last 5 years spot prices paid.

Inventory globally is shrinking with China in particular well below the 4 million cubic meter level mainly due to lack of supply from both New Zealand and Australia.

China has currently a slowing economy, this is because of the USA trade tariffs and uncertainty in other markets with a slowdown in the construction sector generally in China.

During October CFR Prices have increased marginally with an overall increase of between 4% and 6% percent. However, with the rise in fuel prices globally shipping costs are on the rise, eroding the AWG price in NZ which has led to the shortage of new harvesting opportunities.

Things currently effecting the NZ market is the current supply from Europe. Europe has upped there harvest capacity which means spruce logs are now in good supply whereas spruce used to command a premium over pine it now sits between 15-20 percent under Radiata pine. 

Containerisation of logs globally is growing even though this is always sold at a higher premium between US10-15 dollars per ton, however, it has the advantage of easy transport both in China and India where container trucks are the predominant units on the wharf.

One of the most determining facts currently affecting shipping globally is the introduction of lower Co2 emissions and the introduction of lower sulfur diesel. The impact is being felt by us all with BAF rates moving north as shippers adjust to new fuel and increased pricing.

As we work through the issues of our time it is important we stay focussed and improve our mechanization and efficiencies, and above all else keep on hauling.