Several\u00a0major Chinese banks have adopted a government led 16-point rescue plan to extend billions to struggling private developers\u00a0to assist liquidity in the residential construction sector. Covid lockdowns have failed to see this stimulus result in demand increases, however, stocks in major developers jumped following the announcement and, once lockdowns ease and people can return to work, it is expected that there will be a resulting demand increase. It is estimated that around 20% of the economy is under some form of lockdown, and it makes it pretty challenging to feed logs into a sawmill.<\/p>\n
Chinese in-market log inventories have increased slightly over the past month\u00a0and are currently sitting in the mid 3 million m3 range which, although not high, isn\u2019t at the point that makes buyers pucker. It is expected that\u00a0most of the large forests in the Central North Island will take a longer than usual Christmas break (around 3 weeks)\u00a0which will see a decent reduction in NZ supply. Supply over the late December\/early January period arrives in China in mid-February and therefore this drop in supply will coincide with the Chinese New Year holidays.<\/p>\n
December A grade New Zealand log export prices of around $123\/m3 are reasonably flat from the November offerings and, although shipping has eased into the low $US30\/M3 range, the strengthening of the $NZ has taken any chance of an increase in forest owner returns for the short term, a bit like potential first home buyers celebrating as house prices plummet, but the OCR puts you back in the same position. There are expectations that mid to late Q1 2023 will see some potential increases in returns as conditions improve.<\/p>\n
Stimulus packages and an easing of restrictions doesn\u2019t really change the underlying fundamentals of the Chinese economy.<\/p>","protected":false},"excerpt":{"rendered":"
Several\u00a0major Chinese banks have adopted a government led 16-point rescue plan to extend billions to struggling private developers\u00a0to assist liquidity in the residential construction sector. Covid lockdowns have failed to see this stimulus result in demand increases, however, stocks in … Continue reading