NZ Log Market Report - April 2024

Friday 26 Apr 2024

Over the last month, the China market has settled down after a significant swing down with some key factors moving to the positive, albeit not stunningly so.

Whilst NZ wharf gate prices have been negatively impacted over the last month, some of that has to do with shipping. Despite the shipping cost indicator, the Baltic index, showing weakening freight rates internationally, the charterers of log vessels in NZ are suffering at the hands of more localised demand.

Of those factors I typically monitor in China, inventory and daily usage are the most important.

The Radiata log Inventory has been increasing marginally, as at mid-April sitting at around 4.2 million m3. This has generally been regarded positively with most expecting the inventory to start falling when the NZ Log supply juggernaut starts to slow.

Daily softwood log usage across the China Eastern Seaboard has been running at 60,000 – 65000 m3 per day, mostly the upper end and better than expected by most. This has been the primary reason for a slowed inventory build with NZ supply and usage very closely aligned.

The challenge going forward for NZ will be to maintain a lower production cycle. As China moves toward the heat of the summer, construction activity can be expected to slow down. If NZ does not match that, we can expect CFR prices to remain subdued.

I have stated before and I will not shirk from that which I believe to be true, the need to get the supply construct right for NZ Forestry Inc into critical markets like China has never been greater. The need for a collective discussion about how this might work needs to happen and without delay.

The NZ forestry sector is literally losing billions of dollars in export sales because of a failure to get in a room, sort it out, and work to a plan. And as they say the failure to plan is to plan to fail and that thus far, we have done stunningly well.

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Source: Laurie Forestry

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