PF Olsen NZ log market report – July 2024Friday 9 Aug 2024
At Wharf Gate (AWG) prices around New Zealand increased by about 4 NZD in July. Log demand has softened in China during July, with some nervousness around August pricing. Wet weather events are causing a drop in log demand, while the underlying problem of high local government debt and low consumer spending levels continue to create a pessimistic market. Domestic demand for logs remains weak as we continue through the New Zealand winter. The PF Olsen Log Price Index increased from $116 to $118 in July. This is $1 below the two-year average, and $2 below the five-year average. Domestic Log Market Sawn timber demand remains very low in New Zealand. Many mills have already supplied all their orders and report forward orders are very sparse. Difficult decisions will need to be made about production levels. Less log supply due to much lower harvest volumes around New Zealand means log prices have remained stable. The New Zealand property market is facing more headwinds than just high interest rates. The property market overhang is the difference between the total number of properties on the market and the number of properties sold at the end of the month. This overhang has been growing over the last three years. At the end of May 2021 there was an overhang of 7,254 properties. At the end of May 2024 the overhang was 28,242 properties. This increase of 289% in overhang is a result of properties for sale increasing 119% while sales have decreased 43%. New Zealand recorded a net migration loss of 52,500 citizens in the year ended March 2024. This is the first time an annual net migration loss of NZ citizens has exceeded 50,000. Previously, the record annual migration loss of citizens was 44,000 in the February 2012 year. There was still an overall net migration gain of 111,000 (citizens and non-citizens combined) driven by the arrival of non-New Zealand citizens, mainly from India, the Philippines, China and Fiji. In May this year, there was a total provisional net loss of over 2,000 people. The general economic slowdown in New Zealand combined with reduced migration numbers means the level of new housing starts will remain low. Export Log Markets - China China radiata pine log inventory is about 2.7m m3 and log demand is drifting along at about 55k m3 per day. Rain and wet conditions in Northern China have reduced activity. The modest increases expected in log prices in July were hard to come by. Even as CFR prices for imported logs were rising in June and early July the wholesale log prices were not. The range for A grade is currently $118-124 USD per JASm3 for A grade. More >> Source: FP Olsen  | ||
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