New Zealand Log Prices - April 2012Friday 27 Apr 2012 New Zealand’s total log exports to the world in February were up for the first time in three months. Exports to all our major destinations, China, South Korea, India and Japan, were up in February. With an almost 100% increase in exports to India on the month before.The market is in a reasonable state of balance with China softwood inventory on the ports at around 2.9Mm3, or around 60 day’s supply at current off-take levels. This level of inventory is still too high to create upward pressure on CFR pricing in the short term, but any further significant fall in inventory will push US$CFR higher. Export volumes from New Zealand are being maintained, so less supply from North America is required to see the price move up. North American volumes are similar to 2011, but increased domestic demand and pricing combined with lower export prices versus 2011 should combine to reduce North American supply to lower levels than 2011 and provide for a mild market recovery over the balance of 2012. Prices are not forecast to move up quickly, as should they do so then additional volume can quickly be motivated. There is still too much volume on wharves in China. Until stocks reach 2 months usage the price will be under pressure. However, there is news that stocks are falling. Adding to this are reports that volumes to China from the Pacific Northwest could be falling significantly. It is expected that export log prices may improve later in April. Demand for volume in China and India is still at reasonable levels. If the dollar continues around 0.82, export market volumes stay down and log sellers refuse to move from Chinese prices expect a lot more sawmills and processing operations to struggle. The Agrifax Log Price Indicator is again down this month. All North Island regions showed either a drop or no change in log prices. While in the south there was more of a mix with some gains across both export and domestic grades. The combined grades and regions indicator drop this month was again a subtle shift and not a dramatic shift that rocked the boat as it did late last year. Even the rapid rise in shipping cost was expected by most exporters this month. Although any further lowering of export prices coupled with any further gain in shipping will be hard to swallow. Low prices with low cost shipping is bearable but not low prices and high shipping costs. North Island
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