NZ Log Market Report - November 2024Friday 29 Nov 2024
Current national harvest levels are in very approximate symbiosis with demand, but there is a potential for those planets to fall out of alignment as we approach the higher production summer months in NZ. The big unknown facing the world wood fibre trade, surrounds Trump mania and just how the imposition of tariffs on China exports to the US will play out. The China market generally remains in a very much sitting on its hands mode, with nervousness being the order of the day. This reveals itself in a reluctance to negotiate purchases of NZ logs beyond the immediate term. On the surface, the China market looks in reasonable shape. Softwood log inventory levels across the Eastern Seaboard remain a very healthy 2.9mil m3 and daily consumption is running at 60,000 m3. This equates to about 1.5 mil log m3 usage per month, which is currently running at about the same level as supply. Just to emphasise how important China is to the NZ forest sector, 1.5mil cubic metres of logs would build about 65,000 average kiwi houses, equating to 750,000 houses per year. And that level reflects a China consumption that remains relatively subdued compared to the last 3 years! Sitting underneath what looks like an OK market, is a continuing slide in China domestic prices. There is the potential for NZ production to pick up in the summer months, dovetailed to the likelihood China manufacturers are about to face some tariff headwinds with about 40% of their furniture, mouldings and componentry sales to the US. Since the US election, there has been a noticeable reduction in buyers prepared to sign contracts or issue Letters of Credit for Kiwi logs. Market indicator A grade logs have remained stable in November at a selling price of US$CFR125 per m3. Most commentators are suggesting the currently CFR levels are likely to face some heads winds for December and January settlements. Over the last month, both Uruguay and the US Pacific North West have re-entered the China softwood log supply sandpit that has been dominated by NZ for many years. This is not good news in the longer term if successful. Most commentary suggests they will struggle to secure a sustainable cost-effective supply chain, but any additional volume is certainly not required right at the moment. More >> Source & image credit: Laurie Forestry | ||
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