New Zealand Log Prices - March 2008

Friday 28 Mar 2008

After last month's relative calm, export log markets are back in choppy waters, where volatility and uncertainty prevail. Both shipping rates and the NZD have been volatile, but overall are on a strengthening trend. As foreshadowed last month, shipping rates have firmed about $US4 to average $US68 a metre, with exporters unable to pick a clear trend from here. If a slower global economy reduces Asia's demand for raw materials, then it is conceivable that shipping rates could fall quite sharply. Not only would freight volumes fall, but port congestion would ease, allowing much faster turnaround times. Log exporters are reporting a greater willingness for shipping companies to at least consider longer term contracts at rates lower than those currently prevailing.

Korean log prices are mixed. After rising early in the month they are now falling and are down about $US3 a metre on average. Chinese demand and log prices have been relatively steady, which has closed the price gap with Korea. In Japan A grade prices are steady but net returns are being hurt by higher shipping costs. As expected Indian market activity has fallen away due to high stocks and prohibitive shipping costs.

In domestic log markets, pruned log prices have eased this month (down $NZ2-3/tonne on average), with the weak USD and the appalling state of the US housing market. Although there are regional differences, in general logging activity is falling away sharply and once again logging crews are being laid off. Ironically this is likely to produce regional and grade specific shortages and price volatility in coming months.

The NZX Agrifax Log Price Index, which measures returns from the whole forest, gave up last months gains, falling back below $NZ71 a tonne. Further falls in both domestic and export prices are probable next month unless the NZD and shipping rates moderate significantly.

Log price changes:
North Island:
  • Domestic: Pruned log prices are steady to down $5 a tonne. Unpruned sawlog prices are holding in the north, but slightly weaker in the south, with other grades steady to down slightly.
  • Export: Jap A and KS prices are down $1-3 a metre on average. KI prices are mixed, but are unchanged on average in the south and weaker in northern regions. Pulp logs are slightly weaker.

    South Island:
  • Domestic: Pruned prices are steady to down $5 a tonne. Unpruned S1/S2 sawlogs are slightly weaker, while other grades are generally unchanged.
  • Export: Prices are mixed, but down $2 a metre on average.

    For more detailed reports contact Agri-Fax at: www.agri-fax.co.nz/enquiries.cfm


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