Although the May at wharf gate (AWG) New Zealand log export prices are very similar to those offered in April (mid to high $120\u2019s\/m3 for A grade), the underlying variables that make up those prices are vastly different. The variable that has had the biggest influence on the AWG price in the last 12 months has been shipping with freight costs ranging from $US40\/m3 to $US85\/m3.<\/p>\n
To put some figures around the cost of fuel and its effect on log prices, a log vessel will generally take 17 days to reach China with a fuel burn of around 25 tonnes of oil per day. This is a total trip usage of 425 tonnes of fuel and at current fuel costs of $US933 per tonne that\u2019s around $NZ620,000 for the one-way trip. Average payload is around 33,000 tonnes of logs so quick calculations are a fuel cost of $NZ18.80\/m3 for fuel alone.<\/p>\n
As vessels are generally paid for on a time basis, any non-productive wait times outside of loading or unloading increases the m3 unit cost. As NZ ports grapple with Covid absenteeism and a general lack of staff anyway, the ability to unload and load vessels has been impacted creating wait times around the country.<\/p>\n
In addition, the EPA has effectively ruled out the use of methyl bromide, the only fumigant accepted by China for the top deck cargo (around 1\/3 of the vessels cargo) which has resulted in the industry moving to debarking of all deck stowed logs as a substitution. While debarking sounds like a better option, in reality you can\u2019t build one overnight and therefore New Zealand exporters are scrambling to secure top deck cargos where they can. As the Port of Tauranga has the most available debarked volume, vessels are waiting up to 2 weeks at Tauranga waiting for a load due to congestion \u2013 at $US35,000\/day or $NZ1.65\/m3\/day.<\/p>\n
The China Covid elimination strategy hasn\u2019t gone so well in recent weeks with some very hard lockdowns in some of the busiest cities in China. A reasonably sharp increases in inventory i expected if the lockdowns continue through May, which is likely as the Chinese govt don\u2019t like to admit defeat, even if the general population is starting to lose its patience.<\/p>\n
Supply from NZ is down on previous months due to port constraints, subdued returns and a general level of unease by forest owners regarding global stability. Global supply is also lackluster and is not expected to increase from current levels for the remainder of the year which could favor NZ and the potential for price increases through Q3.<\/p>","protected":false},"excerpt":{"rendered":"
Although the May at wharf gate (AWG) New Zealand log export prices are very similar to those offered in April (mid to high $120\u2019s\/m3 for A grade), the underlying variables that make up those prices are vastly different. The variable … Continue reading