NZ market update - August 2025Friday 15 Aug 2025
We have been reasonably fortunate over the winter in terms of log prices, with spot numbers above historical levels for this time of year. Export prices are still well under where we’d like them to be, but they haven’t been as bad as previous years. This is primarily due to lower NZ supply volumes into China and more stability in shipping and foreign exchange rates. August at wharf gate (AWG) prices have been released at around the NZ$122/JAS level (A grade 3.9m) for Southern North Island ports which is the highest August spot price since 2018. Log uplift from Chinese ports has increased from 50,000m3 per day in early July to a shade under 60,000m3 per day currently. Inventory levels dropped around 190,000m3 in July and total softwood inventory now sits below the magic 3 million m3 mark and is expected to continue to recede as the Chinese construction seasons kicks off and NZ supply remains static. The widely reported windthrow in the Nelson Tasman region is very unlikely to result in any notable export supply increase, as both infrastructure and port berthage provide a Hulk Hogan level of chokehold on throughput. General expectation is that in-market sales prices will continue to rise against lower inventory levels, and traders will look to lock down vessels to take advantage of the historical price increase in Q4. The effect of the log futures market is yet to be fully understood, as it is only in its infancy. Approximately 115,000m3 was delivered against futures contracts in July, which was the first month of delivery, and buyer participation in this sale method is expected to increase over time. The domestic market isn’t looking so rosy, with poor demand and increasing inventories of framing timber around the country. NZ building consents dropped by 6.4% month-on-month in June, indicating a significant shift in sentiment which will have a flow-on to actual construction numbers later in 2025. All eyes will be on the OCR announcement on the 20th, with commentators expecting a reduction of around 25 basis points and many expecting it to finally land at 2.5%. While a further cut is likely to inject some confidence into the sector, it may be a reasonable timeframe before it converts into hammers and toolbelts. The resulting softness has seen two sawmills in the SNI reduce log prices for both framing and pruned grades, which is the first price drop in a number of years. More >> Source & image credit: Forest360 .jpg) | ||
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