NZ forestry market update - September 2024Friday 20 Sep 2024
Our domestic mills are experiencing tougher times. Sales volumes are weak, with a lot more competition for a market that is dynamically too small for what can be produced. Mills have been building stock and discounting to keep the wolves at bay. Given that many sawmills also export lumber, sales volume problems are not helped by container freight costs, which like breakbulk logs, have been increasing leaving many export destinations running at a loss. The closure of Winstone’s Kariori pulp mill and Tangiwai sawmill is devastating for the Ruapehu District and the hundred of individuals who have lost their jobs. The word on the street is there is a lot more to it than unrealistically high power prices. Perhaps low demand for sawn lumber in NZ, high international freight costs and reducing paper needs internationally will be in the closure decision mix. India is now firmly back in the log export mix with a 10 vessel per month programme looking to be sustainable and NZ supplying 4 – 5 of those. Whilst this has always been a problematic market, new players in the game are working hard to regain credibility, trustworthiness, and consistency. These are core values the NZ forestry sector can certainly work with.At present, the combination of India selling prices and shipping costs netted back to the NZ wharf gate, is resulting in slightly better bottom line than China. Most commentators are suggesting small lifts in China in October should see the two markets neck and neck. In the critically important China market, it is good to see log inventory falling slightly to 3.4million m3 compared to 3.7mil in August. The primary reason is a lift in daily off port sales from 47,000 last month to close to 60,000 m3 per day. It is fantastic to see shipping rates falling, with ample availability of Loggers opening on the Southern Hemisphere appearing to be the primary reason. Whilst US$2 – 3 per cubic metre drops for October fixtures seem to be the order of the day, the international Baltic Dry index (BDI) is on the rise, reflecting increased hire rates in larger class vessels. The expectation is the recent drops in smaller loggers may not be around for long. More >> Source & image credit: Laurie Forestry | ||
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