New Zealand export log prices recovered in July as lower shipping costs provided some relief to exporters, while reduced log shipments to China helped keep the country's main offshore market relatively balanced despite weather-related disruption.<\/p>\n
At Wharf Gate (AWG) export log prices increased by around NZ$6 per JASm\u00b3 during the month, reversing much of the decline recorded in June. The improvement was driven mainly by softer freight costs earlier in the period, although the shipping market has since turned more volatile as renewed tensions in the Middle East pushed ocean freight rates higher again.<\/p>\n
The PF Olsen Log Price Index increased by NZ$3 in July to NZ$122. The index now stands NZ$2 above its two-year average and NZ$3 above the five-year average, indicating that export market conditions have improved despite continued uncertainty around freight rates and exchange rates.<\/p>\n
Lower New Zealand supply supports Chinese log market<\/strong><\/p>\n China's softwood log market has remained relatively stable despite storms, flooding and high temperatures disrupting activity in southern China and parts of the Yangtze River Delta.<\/p>\n Daily log offtake is running at approximately 55,000 m\u00b3, while port inventories have remained broadly unchanged. An important factor for the market has been a reduction in New Zealand log arrivals compared with the same period last year, limiting the risk of inventory accumulation during the seasonally difficult summer period.<\/p>\n CFR prices for New Zealand A-grade logs are currently around US$126 per JASm\u00b3 for larger exporters.<\/p>\n The supply-demand balance could provide some room for higher prices over the coming months, particularly if exporters need to compensate for renewed increases in shipping costs. However, the scope for rapid increases appears limited. Chinese wholesale log prices have yet to move materially higher, while demand recovery is likely to take longer in regions affected by flooding.<\/p>\n China's manufacturing sector has meanwhile remained close to expansion territory, with the Manufacturing Purchasing Managers' Index at 50.3 in June.<\/p>\n New Zealand sawmills see stronger winter demand<\/strong><\/p>\n Conditions in New Zealand's domestic market have also been firmer than might normally be expected during winter. Log prices for the third quarter have remained largely stable, while many processors introduced a 2% fuel surcharge on domestic lumber in July, subject to monthly review.<\/p>\n Construction activity remains below historical levels, but sawmill demand has held up comparatively well. A series of mill closures during the past two years has reduced available lumber supply, creating a tighter domestic market even before a significant recovery in construction.<\/p>\n July lumber sales were below June levels but remained relatively strong for the winter season. More significantly, mills are reporting an improvement in forward orders, suggesting demand could strengthen as the market moves toward spring.<\/p>\n Residential construction is showing tentative signs of recovery, with annual dwelling consents increasing, led mainly by townhouses and multi-unit developments. Building activity nevertheless remains considerably below the highs reached after the pandemic, while non-residential construction continues to be constrained by weak business investment and elevated project costs.<\/p>\n Export markets are providing additional support. Asian buyers are showing strong demand for New Zealand lumber, with price increases reported across most grades. Combined with reduced domestic supply, these export orders are helping mills maintain utilisation rates and improve pricing during what would normally be a quieter part of the year.<\/p>\n The government's Building Amendment Bill could provide a further medium-term stimulus by simplifying consenting procedures and reducing administrative friction in construction. Its immediate effect on wood consumption is expected to be limited, but faster consenting could support residential and commercial building activity once the reforms take effect<\/p>","protected":false},"excerpt":{"rendered":" New Zealand export log prices recovered in July as lower shipping costs provided some relief to exporters, while reduced log shipments to China helped keep the country’s main offshore market relatively balanced despite weather-related disruption.<\/p>","protected":false},"author":1,"featured_media":99527,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"Default","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"footnotes":""},"categories":[5204],"tags":[],"class_list":["post-99526","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-daily-news"],"acf":[],"yoast_head":"\n