Export Log Prices in New Zealand Hit a New Low
The export log prices in New Zealand have experienced a significant decline, reaching their lowest point since July last year. According to reports, there has been a decrease of an average of $22 per JASm3 at Wharf Gate (AWG) prices for export logs in May after a decline of $20-25 per JASm3 in April. This drop in prices can be attributed to several factors, including the current state of the Chinese market and the anticipated increase in construction.
One of the primary reasons for the decline in export log prices is the current state of the Chinese market. The CFR log sale price in China for New Zealand pine A grade has plummeted to a range of 108-115 USD per JAS m3. While softwood inventory and log demand in China have remained stable, the anticipated increase in construction has not yet materialized. As a result, Chinese buyers are hesitant to purchase logs at higher prices, causing a decline in the market.
Another factor contributing to the decline in export log prices is the increase in supply. The New Zealand forestry industry has experienced significant growth in recent years, resulting in an increase in supply. This increase in supply has led to a surplus of logs, which has put pressure on prices.
The decline in export log prices has had a significant impact on the New Zealand economy. The forestry industry is one of New Zealand’s largest export earners, generating over $6 billion in export revenue annually. The decline in prices has led to a decrease in export revenue, which could have long-term implications for the industry.
Despite the current state of the market, there are some positive signs for the New Zealand forestry industry. The demand for wood products is expected to increase in the coming years, driven by the growth in the global population and the increasing demand for sustainable building materials. Additionally, the New Zealand government has announced plans to plant one billion trees over the next ten years, which could help to address the supply-demand imbalance in the market.
In conclusion, the decline in export log prices in New Zealand is a cause for concern for the forestry industry and the wider economy. While there are some positive signs for the industry, such as the expected increase in demand for wood products and the government’s tree planting initiative, it is clear that more needs to be done to address the current supply-demand imbalance in the market.
