New Zealand sawmills are entering the Southern Hemisphere spring with a considerably better domestic order book than they had a year ago, allowing processors to raise sawn timber prices even as the fuel surcharges introduced earlier this year are being removed.<\/p>\n
Market reports from New Zealand indicate that most domestic processors are dropping the 2% fuel surcharge on sawn timber in September while implementing an average price increase of around 5%. The two moves are separate: the surcharge was introduced to cover higher fuel and transport costs, while the September increase applies to the underlying timber price.<\/p>\n
Stand Forestry reported that sawmills experienced their strongest winter demand for several years, with forward orders improving as residential construction activity picked up. The change is particularly notable because winter is normally one of the slower periods for New Zealand's domestic timber market.<\/p>\n
There is some support for that improvement in the construction figures. Stats NZ recorded 40,908 new dwellings consented in the 12 months to July 2026, 21% more than in the previous 12-month period. July alone produced 3,579 consents, compared with 3,252 a year earlier. The composition also remains favourable for structural timber consumption: 1,769 of the July consents were for stand-alone houses and another 1,567 for townhouses, flats and units.<\/p>\n
The monthly figures are less emphatic. On a seasonally adjusted basis, new dwelling consents fell 4.3% in July after a 3.7% decline in June. Non-residential construction also remains weaker, with the value of consents in the 12 months to July down 2.5% year-on-year. The domestic timber recovery is therefore being driven mainly by residential work and by a tighter supply situation rather than by a broad acceleration across all construction segments.<\/p>\n
Supply has changed as well. A number of mill closures and production reductions over the past two years have removed capacity from the New Zealand market. Earlier industry estimates put the loss at more than 400,000 m\u00b3 of annual processing capacity. That has left operating sawmills with a better balance between available timber and orders than during the weaker phase of the construction downturn.<\/p>\n
The fuel surcharge itself illustrates how quickly cost conditions have moved during 2026. Processors were adding surcharges of around 3\u20134% to many sawn timber products in May and June as diesel and transport costs increased. By July these had already been reduced, and most mills were charging around 2%. September's removal effectively ends that temporary pricing mechanism for most suppliers, while the increase in base timber prices remains.<\/p>\n
Export log market remains steady<\/strong><\/p>\n The improvement in the domestic sawn timber market has not been matched by a similar jump in New Zealand export log prices.<\/p>\n At-wharf-gate prices were unchanged in August from July, according to Stand Forestry, after recovering part of their earlier losses during July. Indicative August prices published in New Zealand put A-grade export logs at around NZ$125\/JAS m\u00b3 at the wharf, broadly unchanged from July.<\/p>\n September market conditions in China have nevertheless become somewhat firmer. The Forest Industry Contractors Association reported softwood log inventories at Chinese ports at about 2.38 million m\u00b3 in mid-September, with daily offtake running at around 60,000 m\u00b3. Separate industry figures for late August put inventories at 2.59 million m\u00b3, including around 1.94 million m\u00b3 of radiata pine from New Zealand and Australia.<\/p>\n China remains by far the most important overseas market for New Zealand forestry. In 2025, 55% of New Zealand's forestry export revenue came from China, while logs and poles generated NZ$3.4 billion (\u20ac1.7 billion) of the country's NZ$6.28 billion (\u20ac3.2 billion) in forestry exports. Radiata pine accounts for around 90% of New Zealand's plantation harvest.<\/p>\n For September, however, the two sides of the New Zealand market are moving differently. Domestic processors have enough confidence in their order books to lift sawn timber prices by around 5%, while export log values have remained comparatively stable. Chinese port stocks have been falling and consumption is steady, but freight costs and currency movements continue to limit the return available at New Zealand ports.<\/p>\n That makes the present improvement less a sudden log-price rally than a recovery in the domestic sawmilling market after two difficult years. Residential construction is providing more work, available processing capacity is tighter, and mills are entering spring with stronger forward orders than they carried through recent winters.<\/p>","protected":false},"excerpt":{"rendered":" New Zealand sawmills are entering the Southern Hemisphere spring with a considerably better domestic order book than they had a year ago, allowing processors to raise sawn timber prices even as the fuel surcharges introduced earlier this year are being … Continue reading