PF Olsen NZ Log Market Report – November 2024Friday 6 Dec 2024
November AWG prices for export sawlogs were an average $3 higher per JASm3 than October pricing. Market prices had stabilized in China, so the AWG increases were due to the NZD weakening against the USD. AWG prices for pruned logs increased $10 per JASm3, as demand remains high for pruned logs. Prices for sawlogs have dropped 3 USD in the last week of November though. Domestic log prices are flat as the pricing is set for Quarter 4. Sawmills in New Zealand are often having to compete in price wars to sell sawn timber, as demand continues to drop in the construction market. The PF Olsen Log Price Index increased $2 in November to $122. The Index is now $3 above the two-year average, and $1 above the five-year average. Domestic Log Market Some mills in New Zealand are taking a longer than usual production break over the Christmas/New Year period. This means if forest owners don’t time their log production to stop at the same time, then these logs will end up in the export market. Many sawmill managers comment this is the worst they have seen the sawmilling industry in their career. Forest owners have been dealt another blow with a major buyer of pulp logs in the central North Island announcing its proposal to shut down its paper line. Oji Fibre Solutions is consulting on a plan to permanently shut its Kinleith Mill paper machine and focus on manufacturing pulp. I have frequently commented about the drop in demand for structural sawn timber. Demand is now also down for pallets, so the lower grade products that would be used to manufacture pallets, are now being exported, generally to Asia. Export Log Markets - China China softwood log inventory dropped slightly to 2.4m m3 due to lower supply as log demand has remained steady at 55-60k m3 per day. The CFR price range for A grade is currently 125 USD per JASm3 for A grade. After talking to some Chinese sawmill owners, I estimate about half of China’s mills will take a longer than usual break over the Chinese New Year Holiday period that starts 28th January 2025. This is due to a lack of demand for their product, and they don’t want to be left holding high inventory levels. If New Zealand forest owners take a longer break from harvest production over our Christmas/New Year period, then this drop in supply will match the drop in demand. If New Zealand forest owners overproduce logs at the start of the year, then this will most likely lead to significant increases in inventory levels in China during February. The China Caixin Manufacturing PMI increased in October to 52.0 from 50.3 in September. (Any number above 50 signals manufacturing growth). This surpassed all market expectations. There was a solid rise in export orders and an increase in new business for the first time in four months. Market sentiment has been buoyed by the Government’s latest stimulation package, although previous stimulus packages have not created any real lift in log demand. More >> Source: Scott Downs, PF Olsen  | ||
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