PF Olsen NZ log market report – Feb 2024

Friday 8 Mar 2024

Market Summary

At Wharf Gate (AWG) log prices were stable in February. Log demand in China increased very slowly after the Chinese New Year. CFR log prices have held steady, while log inventory increased during the holiday period. Shipping costs have increased through February and the CFR log prices in China won’t be able to increase to compensate. This means AWG log prices in New Zealand will be under pressure in March.

Domestic log prices are stable with log pricing set for Quarter 1.

The PF Olsen Log Price Index remained at $125. The index is currently $6 above the two-year average, and $4 above the three-year and five-year averages.

Domestic Log Market

Domestic log prices are stable as most log pricing was set at the start of Quarter 1. 

The NZ Reserve Bank has kept the official cash rate at 5.5%. This was expected by the market, but the Reserve Bank softened its stance slightly with new indications it may cut interest rates sooner than expected. “Core inflation and most measures of inflation expectations have declined, and the risks to the inflation outlook have become more balanced.” A rate cut sooner than expected would be welcome news to the sawmilling industry.

Export Log Markets - China

China softwood log inventory increased to 3m m3 over the Lunar New Year Holiday period. Activity has started back very slowly since the holiday period and log use is still below 10k m3 per day heading to the end of February. Even when daily off-take gets back to 50k this still means there is two months of inventory in China.

The sale price for A grade pine logs in China remained stable in February with a slight increase to be in the 128-132 USD range.

The China Caixin Manufacturing PMI remained at 50.8 in January.  (Any number above 50 signals manufacturing growth). This is the first time since May 2021 the index has remained in the expansion zone for three straight months. The market is waiting to see how log demand will recover after the holiday period but early indications are that the construction activity will remain very slow.

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Scott Downs, Director Sales & Marketing, PF Olsen Ltd

Source: PF Olsen

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