The fundamentals across the China market in September remain weak. Daily log consumption across is struggling to get above 60,000 cubic meters per day compared to 80,000 this time last year and 90,000 the year before.<\/p>\n
Despite lower consumption, the overall inventory has dropped to about 4.4 mil cubic meters, down 500,000 cubic meters on last month. This is essentially a reflection of reduced deliveries from New Zealand which now comprise in excess of 70% of all softwood supply. This is about the only positive in the market with commentators suggesting we are in for reductions in sales prices for October contracts.<\/p>\n
The reasons for a likely price drop rests with the difference between the value of NZ logs compared to wholesale prices in China. As at mid-September there was up to a US$10 per cubic metre gap meaning traders continue to score negative margins. Much of the reason for that is the weakening RMB China currency against the NZ dollar.<\/p>\n
NZ log traders have now been making trading losses for 5 months and right now the margin is wider than normal.\u00a0 Thus, there are clear signals of an imminent drop in CFR prices for NZ logs in October. CFR means the cost of logs including freight delivered to China in US$ per cubic metre.<\/p>\n
Many NZ ports face major challenges: delayed arrivals, slow discharge rates, slow load rates and staff shortages are combining to see more ports heavily congested and vessels waiting to come in.<\/p>\n
The PF Olsen Log Price Index\u00a0increased $5 in September to $125 which is $1 above the two-year average, $3\u00a0above the three year-average and $1 above the five-year average. The September index is $7 above the one-year average, which shows that log prices have been well below average over the last year.<\/p>","protected":false},"excerpt":{"rendered":"
The fundamentals across the China market in September remain weak. Daily log consumption across is struggling to get above 60,000 cubic meters per day compared to 80,000 this time last year and 90,000 the year before. Despite lower consumption, the … Continue reading