NZ Forest Products – January 2020 Monthly Market Report

Welcome all, to a new year in the bush. Export markets are stable for the moment however no doubt Chinese New Year is coming early so we can expect an earlier downturn in log exports.

Inventory across the eastern seaboard is increasing. The volumes are said to be around 4.2-4.5 million cubic metres. This is 1.5 million cubic metres higher than at the same time last year. The inventory levels are stable and in line with forecasts from most commentators. Daily output through the ports remains at approximately 40,000 cubic metres per day, nearly half the rate they were a year ago as the China economy slows. This remains at less than most would like, it reflects the Chinese New Year which is about 3 weeks earlier than previous years.

Spruce volumes continue to dominate out of Europe which is maintaining a daily average in sales of approximately 20-25 m3/day. The majority of the market commentators suggests current deliveries of Spruce logs are 700,000 – 800,000 cubic metres per month. Spruce pricing is US$10 – 15 per cubic metre below Radiata. NZ Radiata pine does enjoy a premium because it is very suited to peeling and the machinery that is used in this process is designed for Radiata meaning plywood manufacturers favour it.

A strengthening RMB (China currency) against the Greenback is also helping Chinese manufacturers currently selling into Europe and the USA. Most commentators are suggesting Q1 and possibly into Q2 2020 is going to be unpredictable. The NZ dollar should firm over the new few months. The NZ domestic market has been described by some as “chugging” along. In very broad terms, the demand and supply planets are basically in alignment. Prices for log and lumber are stable and demand is good. 

Let’s see where the road takes us from here but I’m not expecting any large volume increases any time soon so until next month.

Keep Hauling and looking to the future as always.