NZ market update - May 2025Friday 16 May 2025 Opinion Piece: Marcus Musson, Forest360 DirectorMay is the month you can generally set your watch to being the export price tipping point, and this year is no different. Prices have dropped from the highs of February and March by around $15/m3 to the early to mid-$110’s/m3. As with April, there is a range of around $14/m3 between the highest and lowest exporter offerings and the usual spread of around $20/m3 between northern and southern ports. This puts the 3-year average for Southern North Island ports at a shade over $120/m3 for A grade. The 3-year average price is very important when looking at trends and unfortunately this has been on a downward trajectory since early 2023, which is no surprise considering that was about when the wheels really started falling off the Chinese construction market.  Putting price to one side, the metrics don’t look too bad. Chinese port inventories are down around half a million cubic metres from April at 3.5Mm3 and uplift remains solid at 70,000m3 per day. As usual, NZ had a bumper first quarter in terms of volume production and with a 5-week delay from the stump to Chinese ports, it takes a while for this to play out in the market. There are already signs of less vessel arrivals as a result of the poorer April prices and wetter weather, and this will likely continue well into June. If we could get inventory levels below 3 million m3 we would be able to borrow a pair of Trump’s negotiating shoes and reposition ourselves on the supply/demand curve. No matter which way you look at it, China remains our most important trading partner for the forest industry by a country mile, taking around 60% of NZ’s harvest production in log form. Total softwood log imports into China fell from around 50 million cubic metres in 2021 to around 25 million in 2024 and the good news for NZ is that our market share has grown from 40% to 70% over the same period – so a larger piece of a smaller pie. It’s not only logs that are imported to China as lumber also arrives in significant volumes. If you convert the lumber volume into a log equivalent volume, the total softwood imports into China in 2021 was a shade over 75 million log cubic metres of which NZ supply was around 25%. Fast-forward to 2024 and the total softwood import number is around 50 million cubic metres with NZ sitting in first place in terms of supply at 36% and Russia a fast follower at 32%. If you’re a pure numbers person you’d be getting excited about recent increases in Chinese exports which rose 12.4% in March and 8.1% in April. Part of those exports will be furniture, and furniture is made from lumber which comes from logs, NZ logs. Unfortunately, it’s pretty easy to see this is likely a result of tariff front loading rather than any change in real demand. In reality, the inverse is happening with a drop in furniture grade log prices (Pruned logs) in China as tariffs start driving negative sentiment amongst furniture manufacturers which is less than ideal. More >> Source & image credit: Forest360  |
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