Domestic log prices in China have continued to firm in the last 4 weeks with the Chinese Government implementing a range of measures to off-set a potential construction sector collapse. This has restored confidence. The correlation between China domestic sales prices and the cost or New Zealand Radiata pine logs is a key market driver.<\/p>\n
At the same time, the containerized Southern Yellow Pine trade out of the US has dried, taking 500,000 \u2013 600,000 cubic meters per month out of supply lines. This is due to a combination of US domestic new housing demand and a tightening of phytosanitary requirements. This essentially means the China Government are requiring full fumigation, inspection and pass muster status to be the order of the day whereas previously some China Port Authorities were looking the other way.<\/p>\n
Spruce log out of Europe has slowed to 500,000 \u2013 800,000 cubic meters per month, half compared to the same time last year.\u00a0 Again, the container trade has become much harder and Europe new house demand is also experiencing a significant increase whilst bark beetle affected forest harvest is decreasing.<\/p>\n
Both the SYP and Spruce supply lines compete directly with Radiata pine out of NZ.<\/p>\n
In the first 2 weeks of January, log buyers in China returned to the negotiating table in number as concerns mount there could be log shortages looming if demand kicks up strongly, post Chinese New Year. Most sources contacted by GWMI seem to believe it will.<\/p>\n
There is also a waiting game being played out with concerns as to what degree there is pent up demand, versus where the likes of in trouble construction companies like Evergrande will eventually crash land.<\/p>\n
The bottom line is, we are seeing tempering in sales and a corresponding hesitancy to push prices too high too quickly. For the moment, the market is moving in the right direction.<\/p>\n
The next few weeks will be critical to what happens in Q1 and 2 this year. China eastern seaboard inventory has been falling as expected, as at mid-January sitting at just over 5 mil cubic meters.<\/p>","protected":false},"excerpt":{"rendered":"
Domestic log prices in China have continued to firm in the last 4 weeks with the Chinese Government implementing a range of measures to off-set a potential construction sector collapse. This has restored confidence. The correlation between China domestic sales … Continue reading