New Zealand Log Prices - November 2011Friday 25 Nov 2011 A significant drop in the in-market log price last month has rebound slightly in recent weeks with an invigorated market sentiment triggered by a drop in the market price for logs. Supply chains have been emptied as oversupply in wholesale markets had seen credit facilities dry up and result in a couple of months of reduced supply. Now that the pipeline is empty wholesale speculators in China and India are very enthusiastic to fill this void.Our in-market price recorded for November is US$115/JASm³ for KS logs and US$110/JASm³ for KI logs. But the real price could now be up US$5-8 from that for each grade. This reflects the volatile market that exists currently. It should be made clear that it is not any sort of increase in demand that has triggered the support to the fall in market prices. Market fundamentals have not changed since last month. As predicted last month an empty supply chain has created a lift to prices rather than a fundamental change to supply and demand. Demand may be subdued in China until into the second quarter of 2012. This is partly due to the on-set of the winter in northern China, followed by the Chinese New year in January 2012. Last month’s congestion pressure in southern China has been partially released this month and resulted in some inventory decreases. The NZX Agrifax log index has come down this month after the fall in export log prices. Last month the index held steady with the domestic and pulp log prices gaining a little. With unpruned logs having a greater overall weighting than pruned logs this supported the index value. North Island
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