PF Olsen NZ log market report – October 2024Friday 1 Nov 2024
The domestic demand for sawn timber in New Zealand remains well below production capacity. Mills have reduced orders for logs, so forest owners have to export a higher percentage of their production. Fortunately, At Wharf Gate (AWG) prices for export logs increased by an average of 9 NZD in October. The CFR log prices in China have risen steadily over the last couple of months. A strengthening USD against the NZD along with a relatively stable market in China means these AWG price increases should be consolidated in November. However, this pricing is still fragile, especially if there is significant increased log supply through New Zealand’s summer months. The PF Olsen Log Price Index increased $4 in October to $120. The Index is now $1 above the two-year average, and level with the five-year average. Domestic Log Market Sawmill managers report that sawn timber sales are still very slow, with high inventory levels of sawn timber in the supply chain. It is estimated there is over 40% of sawmilling capacity not being used in New Zealand as mills slow down production. Spring has arrived in New Zealand and there has been little increase in demand for timber from DIY projects. This is the time of year when these projects begin, but it seems many households are controlling their spend and in the current economic slowdown. These sales are usually the higher margin sales as well. Many mills continue to reduce orders of logs. With some harvest jobs starting as the weather improves in New Zealand, there is more supply than local mills can handle. Export Log Markets - China China softwood log inventory is about 2.7m m3 and the inventory levels fluctuated along with supply levels, as log demand has remained steady at 60k m3 per day. The CFR price range for A grade is currently 124-128 USD per JASm3 for A grade. This has increased steadily over the month and now appears to be stable. However, wholesale log prices have recently dropped slightly (10-20 RMD per m3), as sawmill inventory levels have increased. The furniture and MDF markets are faring better than the construction market. Therefore, the higher-grade logs, such as pruned and A grade, are easier to sell than the lower-grade logs. The smaller KIS grade logs are easier to sell than the larger KI grade logs, as KIS (along with K grade) is used by MDF manufacturers. The China Caixin Manufacturing PMI slipped in September to 49.3 from 50.4 in August. (Any number above 50 signals manufacturing growth). This is the lowest level since July 2023. In general, supply edged up while demand dropped. The log market was a contrast to this though, as log supply dropped over this period. More >> Source: Scott Downs, Director Sales & Marketing, PF Olsen  | ||
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