September NZ log market updateFriday 7 Oct 2022
At Wharf Gate Prices for export logs increased 7-8 NZD per JASm3 across ports in New Zealand in September. The increase in AWG prices was again due to reduced shipping costs. Shipping costs have now stabilised. There is pressure on CFR log sale prices in China due to the strengthening USD, reducing the purchasing power for Chinese buyer. Domestic logs prices in New Zealand are unchanged. The PF Olsen Log Price Index increased $5 in September to $125 which is $1 above the two-year average, $3 above the three year-average and $1 above the five-year average. The September index is $7 above the one-year average, which shows that log prices have been well below average over the last year. Domestic Log Market Domestic log prices have been stable with little change as most domestic pricing is agreed at least quarterly. Domestic demand for sawn timber continues to be consistent. There is an oversupply of pruned logs in the central North Island, but all other regions seem to be in balance. Export Log Market China China’s softwood log inventory has reduced by about 1m m3 over the last month to be below the 4m m3 mark (3.8-3.9m), with radiata accounting for about 3.2m m3 of this volume. Daily port offtake has increased to about 70k-75k m3. The reduction of inventory is due to significantly reduced supply. The Chinese Golden Week Holiday to commemorate the founding of the People’s Republic of China in 1949 starts Oct 1st and ends Oct 7th. There will be less people travelling than usual again this year due to Covid-19, so this means the reduction in log demand caused by this disruption to work is likely to be less than previous years. There is a wide range of CFR sale prices for radiata logs in China. A grade currently sells between 136 and low 140’s USD per JASm3 for A grade. The difference in sale price between the better grades and lengths versus the lesser desired grades and lengths has also widened. The weakening of the CNY against the USD means log sales will most likely trend towards the lower end of this range. Uncertainty around future currency movement is also a legitimate concern for Chinese log buyers. The August Caixin China Manufacturing PMI decreased to 49.5 from 50.4 in July. Output grew at the softest pace in three months, as delivery times lengthened for the second month in a row due to power cuts and disruption from Coronavirus. Both new orders and buying levels fell for the first time since May. Employment fell for the fifth month running, with 20% of youth in urban China now unemployed. The value of residential construction in China made up 63% of the total construction value in China in 2021. This share is forecasted to be about 50% for 2022. Residential construction will continue to be restricted due to ongoing deleveraging reforms on property investors, with no growth predicted in residential property construction in 2023. Market analysts predict an increase of commercial property construction and infrastructure projects for 2023. This assumes fewer and shorter Covid lockdowns. Local government special bonds are becoming an important funding source for construction in China. This funding source has risen from funding 25% of construction in 2021 to 39% in 2022. The Ministry of Finance has announced a target of special bond issues of 3.65 trillion CNY. Approximately 95% of this spend is targeted for infrastructure projects. If Covid lockdowns ease and temperatures reduce in China, productivity will increase. While log demand won’t return to its previous heights, global log supply is also limited. The actual balance between log supply and demand is still unknown due to Covid and other external influences. Now the strengthening USD will add further uncertainty to this market. More >> Source: Scott Downs, Director Sales & Marketing, PF Olsen Ltd | ||
Copyright 2004-2024 © Innovatek Ltd. All rights reserved. |
