NZ log market report - April 2025Friday 2 May 2025
Domestically, the construction sector remains subdued despite recent interest rate cuts, with residential building consents trending lower and government infrastructure spending reduced. Although lower interest rates may support a recovery later in the year, this has yet to materialise in increased log demand. Compounding these pressures, the New Zealand dollar has strengthened against the US dollar, reducing the competitiveness of New Zealand logs in overseas markets. This currency shift is putting further downward pressure on At Wharf Gate (AWG) prices for forest owners. AWG prices for export logs in New Zealand reduced by an average of 9 NZD per JASm3 and are expected to fall further in May as log prices continue to soften and the NZ dollar strengthens against the US dollar. The PF Olsen Log Price Index has fallen to $118. The Index is now $1 above the two-year average, and $2 below the five-year average. Domestic Log Market The New Zealand domestic log market continues to face significant challenges, primarily due to a sustained downturn in construction activity. Recent data from Stats NZ indicates that in the year ended February 2025, there were 33,595 new dwellings consented, marking a 7.4 percent decrease compared to the previous year. This decline underscores the ongoing softness in the residential construction sector, which directly impacts demand for structural logs and timber products. Sawmills are navigating a delicate balance. While there is a pressing need to adjust log prices to maintain operational viability, there's also a recognition that substantial price reductions could lead to decreased harvesting activities, further tightening supply chains. This precarious situation is compounded by broader economic factors, including reduced government spending on infrastructure projects and tighter credit conditions, both of which are dampening overall construction activity. Although recent interest rate cuts offer a glimmer of hope for revitalising the housing market, the anticipated uptick in construction activity has yet to materialise. As winter approaches, the domestic log market remains cautious, with stakeholders closely monitoring economic indicators and housing demand trends. China US Tariffs Currently, sawn timber (lumber in American terms), wooden panels and other wood products are excluded by the US from reciprocal tariffs. This includes rough and surfaced lumber, plywood, MDF and other wood-based panels, blockboards, etc. More >> Source: Scott Downs, PF Olsen | ||
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