Wood Matters: NZ log market December 2025Friday 19 Dec 2025
Log demand in China remains relatively consistent, and many New Zealand forest owners are taking extended production breaks over the summer period. This reduction in supply to China is timely, as market activity is expected to slow ahead of the Chinese New Year Spring Festival holiday period beginning on 17 February. Domestic log prices in New Zealand remain stable, with most pricing already set for Q4. The outlook for 2026 is slightly more positive than 2025. The PF Olsen Log Price Index fell by $2 to $120. This places the Index $1 above the two-year average and level with the five-year average. Domestic Log Market Log prices are anticipated to remain stable during Quarter 1 2026. Demand for industrial-grade timber is starting to increase as it is used to construct pallets and packaging used for exporting seasonal fruit harvests. Some mills have increased production through Quarter 4 due to low stocks levels through the supply chain. Looking ahead to 2026, there is a growing body of evidence suggesting that domestic demand for sawn timber in New Zealand is likely to improve. While construction activity has remained subdued through 2024–25, forward-looking indicators point to a gradual recovery from 2026 as residential building stabilises and infrastructure activity lifts. Government construction pipeline forecasts show total construction activity bottoming out in 2025 and increasing from 2026, which would support higher consumption of structural and appearance-grade sawn timber. Building consent trends are consistent with this view. Although consent volumes remain well below peak levels, recent data indicates that the decline has largely run its course, with signs of stabilisation emerging in late 2025. Historically, movements in building consents translate into changes in sawn timber demand with a lag of several months, suggesting that any sustained improvement in consents would flow through to stronger domestic timber demand during 2026. Broader economic conditions are also becoming more supportive. Easing inflation and expectations of lower or stable interest rates into 2026 are expected to improve housing affordability and confidence, supporting both new builds and renovation activity. Industry commentary from domestic processors indicates improving enquiry levels and a more constructive outlook for early 2026, although most mills remain cautious and expect any recovery to be gradual rather than sharp. Overall, while risks remain around export market weakness and the pace of construction recovery, the balance of indicators suggests that domestic sawn timber demand is more likely to increase than decline in 2026. Any improvement is expected to be moderate, but it would represent an important shift from the weak conditions experienced over the past two years and could help underpin more stable domestic markets for logs and sawn products. More >> Source: PF Olsen  | ||
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