PF Olsen NZ Log Market Report – November 2023

Friday 8 Dec 2023

Market Summary

The November AWG prices for New Zealand export logs increased an average of NZ$12 per JASm3 from October prices. North Island prices increased about NZ$10 while prices in most South Island ports increased more, albeit from a lower base. Log demand in China continues to remain steady with log inventory at extremely low levels. The AWG price increases were due to a mixture of a weaker NZD against the USD, slightly lower shipping costs and increases in sale prices in China.

New Zealand’s domestic demand for sawn timber has had a post-election boost with an increase in construction projects for the coming summer and a good export crop of kiwifruit requiring wooden pallets for export.

The PF Olsen Log Price Index increased $6 to $118. The index is currently $1 below the two-year average and $4 below the three-year and five-year averages.

Domestic Log Market

Domestic mills report an increase in sawn timber demand as construction gears up for summer. Stocks of sawn timber have been depleted thoughout the supply chain as well, so this is being built up again increasing demand. Some truss and frame manufacturers report they are booked-up until March next year. The kiwifruit yield in New Zealand has been much higher than last year so there is strong demand for material to make pallets.

Sales of sawn timber to Asia are holding up okay with some slight price increases as well. 

Export Log Markets:  China

The sale price for A grade pine logs in China is now in the range 125-130 USD per JASm3. China radiata log inventory remains about the same as last month around 1.7-1.8m m3, with total softwood inventory at about 2.3m m3. Daily port off-take has remained within the range of 65-70k m3 per day.

In mid-November the Chinese government announced a 127 billion USD stimulation package involving low-cost financing for urban village renovation and affordable housing programs. The Peoples Bank of China will facilitate banks injecting funds in phases into the economy. This is expected to trigger construction activity. There is still a fundamental issue in that the Chinese population doesn’t see real estate as a good investment, as they don’t think values will rise. So this may increase supply more than demand, which won’t improve value. At least the Chinese government is taking steps to creae activity in this sector which is a good sign.

The China Caixin Manufacturing PMI dropped from 50.6 in September to 49.5 in October (Any PMI number above 50 signals manufacturing growth). This reading indicates the first contraction in manufacturing activity since July.

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Scott Downs, Director Sales & Marketing, PF Olsen Ltd

Source: PF Olsen

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