New Zealand log prices held firm in October as Chinese buyers returned after Golden Week and demand improved in India. At home, higher diesel prices are adding to harvesting and transport costs, taking some of the benefit out of stronger sales.<\/p>\n
Chinese softwood log consumption was running above 60,000 m\u00b3 a day by mid-October. Stocks on the eastern seaboard had increased by about 120,000 m\u00b3 to 2.5 million m\u00b3 during the holiday, when vessels continued arriving while processing and trading slowed.<\/p>\n
The rise in consumption after the break is encouraging for exporters. The stock increase had been expected; the more important question was how quickly buyers would return.<\/p>\n
Importers\u2019 losses narrow<\/strong><\/p>\n Chinese traders are getting better resale prices, although these remain below import costs.<\/p>\n Mid-October indications put landed prices at approximately USD 132\/m\u00b3 CFR and average domestic resale prices at USD 128\/m\u00b3. The difference has narrowed to around USD 4\/m\u00b3, from the USD 6\u20137\/m\u00b3 losses seen previously.<\/p>\n That is an improvement, but it leaves little room for buyers to absorb higher import prices. Exporters have a more active market, while their customers still need better selling prices to restore margins.<\/p>\n Improving manufacturing activity is another encouraging sign. For the log trade, however, sustained daily consumption and the direction of port inventories will provide a clearer indication of how much additional supply China can absorb.<\/p>\n Diesel adds to harvesting costs<\/strong><\/p>\n New Zealand\u2019s logging and haulage businesses face a much steeper fuel bill than a year ago.<\/p>\n An indicative sector calculation puts annual diesel consumption above 300 million litres, based on roughly 515 logging crews and 2,500 log truck-and-trailer units.<\/p>\n The October diesel price used in that calculation is NZD 3.16\/litre, compared with NZD 1.81\/litre a year earlier. At 300 million litres, the NZD 1.35\/litre difference would add approximately NZD 405 million to annual costs if maintained.<\/p>\n This is an estimate rather than a measured industry total. It also excludes sawmill loaders, port equipment and service vehicles, which face their own increases.<\/p>\n Firm log prices are therefore only part of the picture. The cost of getting timber from the forest to the customer has risen substantially, with contractors paying more to keep the same volumes moving.<\/p>\n India could bring more volume<\/strong><\/p>\n India offers another opportunity for New Zealand exporters, particularly if tariff removal eliminates the price disadvantage against competing origins.<\/p>\n The previous disadvantage is estimated at USD 6\u20137\/m\u00b3 relative to supplies from Australia and Uruguay. Removing it would make New Zealand logs more competitive without requiring exporters to lower their prices.<\/p>\n Indian sawmill buyers\u2019 preference for New Zealand logs could help suppliers win additional business. Australian exporters may have to accept lower prices to retain customers.<\/p>\n The likely near-term benefit is higher shipment volumes rather than a matching increase in returns to New Zealand forest owners. Some of the tariff saving may be retained by buyers, while competing suppliers could respond with discounts.<\/p>","protected":false},"excerpt":{"rendered":" New Zealand log prices held firm in October as Chinese buyers returned after Golden Week and demand improved in India. At home, higher diesel prices are adding to harvesting and transport costs, taking some of the benefit out of stronger … Continue reading