Forest360 NZ market update - August 2024Friday 16 Aug 2024
Double dips are great when we’re talking about chocolate dip, chip’n’dip and lotto but not so good when talking export log prices, but here we are. Quarter three kicked off with August prices down around NZ$4/m3 from July, following a very slight rally from the low in April. Prices vary between ports but for the Southern North Island and Northern South Island you’re looking at around NZ$113/m3 for A grade shorts with Tauranga up a few on that, Lyttleton breaking into triple figures at NZ$101/m3 and similar numbers for the more southern ports. Interestingly, the three-year average price has dipped into the sub NZ$120/m3 range for the first time since May 2018. Depending on whether you’re a glass half full or empty person, you could argue either way that current stickiness is a supply or demand problem, and to be fair you’d be right on both counts. Demand has reduced primarily due to the Chinese construction implosion, but this has been exacerbated by the traditional off season plus heavy rain and severe flooding in Northern China restricting uplift. Meanwhile, supply has dutifully carried on at around 55,000m3 per day, even in the face of ugly pricing, resulting in only a very small reduction in China on port inventory of 50,000m3 taking the total inventory position to 3.15 million m3. This is basically a Mexican stand-off, but the difference is we are pointing our own guns to our heads. Until we can get inventory well under 3 million m3, we’re unlikely to see much in the way of price increases. The scenario in NZ isn’t a lot rosier in the construction space, with framing lumber demand looking decidedly average. There is a glimmer of hope with the talk of OCR reductions, but there will need to be a significant change in sentiment before housing starts return to 2023 levels. Domestic sawmills have been hitting the papers lately, with a number of sawmills and pulp mills temporarily closing while spot electricity prices leap higher than Hamish Kerr. WPI shut both its sawmill and pulp mills, Oji closed its Penrose mill, Panpac shut its Napier mill and Donnelly’s shut its Reporoa sawmill. Shutting a sawmill or pulp mill takes a lot of consideration, as it’s not just a case of flicking the switch off. There’s a massive cost to both shutting down and restarting these assets. More >> Source and image credit: Forest360  | ||
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