NZ market update - April 2025Thursday 17 Apr 2025
You couldn’t make this stuff up, even if you tried. If you had written a book about a global economic situation, such as the current one, it would have been a flop as it would have seemed too farfetched and laughable, but here we are. Let’s not for a moment think that this isn’t what the majority of Americans signed up for though, as tariffs and protectionism were a large part of Trumps campaigning, and it’s not like he’s known for being predictable. Add to that the fact that something had to be done to stem the bleed that has led the US national debt to rise by $12.3 trillion in the last 5 years to a total of $36.2 trillion (sound familiar?). I’m not sure that severing everyone else’s arteries is the best way to stem your bleed, however. The tariff roulette wheel has been spinning furiously for the past few weeks, and you would have more chance of hitting a bullseye on a dartboard blindfolded after drinking a bottle of whisky than predicting where tariffs will end up on a country-by-country basis. What we do know is that our largest trading partner, China, probably isn’t going to fare that well. In 2024, around 30% of the furniture manufactured in China headed off to the US. China is not the biggest supplier into the US however, with Vietnam exporting double the value of Chinese exports into the US. Of the total volume of furniture consumed in the US, 52% was made domestically, but the actual value of the imported furniture inputs was 63% meaning that some imported products were used in domestic manufacturing. So, what does this mean for NZ? With a current US:China tariff of 145% (pick a number for what it could be next week) it’s very likely that there will be a significant reduction in goods manufactured in China headed to the US – furniture included. NZ grown radiata is very popular in the Chinese furniture industry due to its properties as it can easily be sawn, dried, glued, laminated, painted and stained. This sector has become more important to NZ as the construction sector continues to suffer and demand for NZ radiata in construction has reduced significantly from 2021 onwards. Having said that, China demand for NZ logs is still strong, with off port uplift in the order of 70,000m3 per day in late March. On port inventory remains a bit stubborn at a shade under 4million m3, however, this has reduced by 100,000m3 in the past few weeks. March is historically a big supply month for NZ and this year was no different with plenty of vessels on the water. This supply, along with uncertainty in the market, has resulted in a downturn in buyer sentiment, with April CFR prices dropping 8-10% based on March numbers. More >> Source & image credit: Forest360  | ||
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