PF Olsen NZ Log Market Report – October 2023Friday 3 Nov 2023
October At Wharf Gate (AWG) prices for export logs reduced an average of 4- 5 NZD per JASm3 from September prices. Log demand in China remains steady and log inventory is at extremely low levels. However, the log buyers are not overly concerned about the very low inventory as demand is not increasing as it usually does at this time of the year in China. The domestic market continues to show signs of recovery with some confidence returning to the industry after the New Zealand General Election but the global demand for sawn timber is still soft. The PF Olsen Log Price Index dropped $2 to $112. The index is currently $7 and $10 below the two-year and five-year averages respectively. Domestic Log Market Log supply is still tight in some regions as some smaller forest owners slow down or stop harvest production. Most Quarter 4 log pricing was flat with some small price increases in structural logs in some areas due to the tight supply. Mills report domestic orders increased within a few days of the New Zealand General Election on 14 October, so it appears there is some confidence returning in the construction industry. Demand in Europe for clear sawn timber boards produced by New Zealand mills has continued to stall. Export Log Markets China China radiata log inventory continues to reduce and is now around 1.7m m3, with total softwood inventory at about 2.7m m3. Daily port off-take has remained within the range of 65-70k m3 per day, which is in the normal range for this time of the year in China. However, the market does not anticipate significant increases in demand when China moves into its usual busier months for construction. Inventory levels falling even with the Golden Week of holidays in the first week of October shows that total log supply has reduced. Australian logs have been offered to the China market again after China lifted a two and a half year trade-ban in June, but these initial logs have been cut to Indian log lengths. Inventory levels significantly below 4m m3 used to trigger sharp increases in log prices, but this isn’t the case with a subdued market. The October CFR price for A grade logs remains in the range of 110-117 USD per JASm3. Market forecasts for November sales are in the 115-120 USD per JASm3 range. The China Caixin Manufacturing PMI dropped from 51.0 in August to 50.6 in September. Any PMI number above 50 signals manufacturing growth. Output expanded the most in the last four months and this is the second straight month of growth amid efforts from the Chinese Government to revive the Chinese economy. However, sentiment dropped to a 12-month low which is vey significant for the Chinese log market as this market has often previously been sentiment driven. These stimulation efforts appear to be more successful in other areas of the economy rather than the real estate market which has significant headwinds. Unlike previous stimulation packages the Chinese Government has not intervened directly in the construction sector. More >> Scott Downs, Director Sales & Marketing, PF Olsen Ltd Source: PF Olsen  | ||
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