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Log demand in China has not increased as much as expected after the Lunar New Year, but there will be significantly reduced log supply from New Zealand due to several severe weather events across the top half of the North Island. This will likely increase price pressure for logs in China. \u00a0The domestic demand for logs is weakening as building projects are cancelled or delayed.<\/p>\n
China softwood log inventory is just over 4m m3 and port offtake is still stubbornly sitting at about 60k per day. There are very recent indications port offtake may be increasing but nothing sustained yet.<\/p>\n
The CFR price for A grade radiata logs in China is in the range 135-140 USD per JASm3 . South American logs are again heading to China with January and February loaded vessels selling for 110-120 USD per JASm3, but March offers are in the high 120\u2019s. European spruce is offered at 160 EUR (168 USD) per JASm3.<\/p>\n
The China Caixin manufacturing PMI edged up slightly from 49.0 to 49.2. The Purchasing Managers Index published by the National Bureau of Statistics in China rose 3.1 points to be at 50.1 for January. For both indices, a reading above 50 indicates an expansion of the manufacturing sector.<\/p>\n
Warehouse prices in China had dropped 5% in the first half of February, but this slight decline has halted as the market becomes aware of reduced supply from New Zealand.<\/p>\n
There will be a significant reduction in log supply from New Zealand. The worst affected areas on the east coast of the North Island contains Gisborne and Napier ports. These two ports account for about 25% of New Zealand\u2019s log exports. These ports have effectively been closed for two weeks. Log production in this area is very unlikely to be above 50% for the short term. Some operations are also slow in Tauranga due to wet weather and have stopped in Northland due to damage of the public roading infrastructure.<\/p>\n
Log demand in China has not increased as much as expected after the Lunar New Year, but there will be significantly reduced log supply from New Zealand due to several severe weather events across the top half of the North … Continue reading