New Zealand's export log market is entering spring with China providing a relatively stable outlet while India remains caught in its seasonal slowdown. Chinese softwood inventories are contained, daily log consumption is holding at around 55,000 m\u00b3 and New Zealand A-grade prices have edged up to US$125\u2013130\/JAS m\u00b3 CFR. India presents a more difficult immediate picture: Kandla is carrying unsold inventory, sawmill margins are under pressure and monsoon conditions are keeping buyers cautious. Yet the longer-term Indian story is moving in the opposite direction. New Zealand wood exports to India have tripled in three years to NZ$193 million, even before the recently signed free trade agreement has entered into force.<\/p>\n
For New Zealand exporters, China remains the market that sets the immediate tone. A-grade radiata pine logs are currently trading at around US$125\u2013130\/JAS m\u00b3 CFR, a modest improvement over recent levels, while softwood inventories at Chinese ports have remained broadly stable with some regional declines. Daily log offtake is running at approximately 55,000 m\u00b3, enough to prevent inventories from building significantly but not enough to generate a strong price rally. The currency environment has also become more favourable for Chinese buyers as the yuan has strengthened against the US dollar, improving their purchasing power. For New Zealand sellers, however, part of that benefit is disappearing through the other side of the trade: ocean freight remains expensive and the New Zealand dollar strengthened against the US dollar during August. As a result, At Wharf Gate prices showed little movement from July despite the small increase in Chinese CFR prices.<\/p>\n
The Chinese market is therefore providing stability rather than growth. Manufacturing data tell a similar story. The private-sector RatingDog China General Manufacturing PMI eased from 51.7 in June to 50.9 in July, remaining above the 50 threshold for an eighth consecutive month but signalling slower expansion. The official NBS manufacturing PMI was considerably weaker at 49.2, indicating contraction. Neither measure points towards a sudden acceleration in industrial wood consumption. For New Zealand log exporters, the more relevant indicators remain port stocks and daily consumption, and both currently suggest that the market is reasonably balanced. China is buying enough radiata pine to maintain the trade without accumulating the excessive inventories that have periodically forced sharp corrections in imported log prices.<\/p>\n
A more important question is beginning to emerge further ahead. China's forestry strategy for 2026\u20132030 aims to increase national forest coverage to 25.8% and total forest stock to 22.4 billion m\u00b3, while expanding the forestry and grassland economy to RMB14 trillion. Those targets do not imply that China is about to replace imported timber with domestic production. Large areas of Chinese forest are unavailable or unsuitable for intensive commercial harvesting, while additional standing timber takes time to translate into usable industrial supply. Nevertheless, greater plantation production combined with improvements in harvesting, transport and processing infrastructure could gradually increase the amount of domestically produced timber available to Chinese mills.<\/p>\n
For New Zealand, the risk is concentrated less in premium radiata pine than in the lower end of the log market. New Zealand plantation logs have advantages in consistency, silvicultural management and processing performance, particularly in grades where mills place a premium on predictable recovery. Chinese-grown logs are therefore unlikely to replace imported radiata across the market. Lower-grade industrial logs are more exposed because price plays a larger role in purchasing decisions. China would not need to eliminate a large share of New Zealand imports for this to matter. Given the scale of New Zealand's dependence on the Chinese market, a gradual increase in Chinese domestic supply could remove enough marginal import demand to influence prices during periods when construction and manufacturing consumption are weak.<\/p>\n
India is weak now, but becoming much more important<\/strong><\/p>\n India presents almost the reverse situation. Current trading conditions are difficult, but the structural development of the market is considerably more encouraging. Kandla remains subdued during the monsoon, with green pine lumber prices around INR 601\u2013621 per cubic foot and New Zealand A-grade logs at approximately US$160\/JAS m\u00b3 CFR. The relationship between those two prices leaves limited room for Indian sawmills, particularly once handling, finance and processing costs are included. Buyers consequently have little incentive to build inventories while end-market demand remains weak.<\/p>\n Supply is not scarce. Around eight vessels carrying approximately 280,000 m\u00b3 of pine logs berthed at Kandla during August, adding material to a market already carrying unsold logs in bonded yards. Some of those volumes are being offered at discounts. Congestion is creating additional costs, with priority berthing delays of roughly four to five days and conventional berthing delays closer to seven or eight days. The weakening Indian rupee against the US dollar has added another problem by increasing the local-currency cost of imported logs. A substantial improvement is therefore unlikely while the monsoon continues, and market expectations are increasingly focused on the period after Diwali, with a more meaningful recovery possible from around mid-November.<\/p>\n Tuticorin demonstrates why Indian demand cannot be judged from Kandla alone. The southern port operates with a different supply structure, including containerised pine logs from New Zealand, South Africa, Australia and the United States as well as smaller bulk parcels. A recent shipment included approximately 11,000 JAS m\u00b3 of Australian pine, carried as part of a mixed bulk cargo. Import prices range from roughly US$145 per tonne to US$166\/JAS m\u00b3 for A-grade material depending on origin and freight arrangements. More importantly, green pine lumber sold through Tuticorin is achieving around INR 700\u2013750 per cubic foot, a substantial premium to Gandhidham. India remains a fragmented timber market in which regional processing economics, port logistics and end-user demand can produce very different outcomes for essentially similar imported raw material.<\/p>\n The current weakness also needs to be separated from the remarkable expansion of New Zealand's wood trade with India. Wood product exports reached NZ$193 million in the year to June 2026, around three times their level three years earlier. Logs accounted for NZ$122 million of the total and pulp for another NZ$74 million, leaving processed timber and manufactured wood products with only a small share. India has therefore already become a much larger customer for the New Zealand forestry sector, but so far the growth has overwhelmingly benefited exporters of raw and semi-processed material rather than domestic sawmills seeking higher-value markets.<\/p>\n That could begin to change under the new trade agreement between New Zealand and India. The Comprehensive Free Trade Agreement signed in New Delhi on 27 April will eliminate tariffs on more than 95% of New Zealand forestry and wood exports once it enters into force. Existing Indian duties on many New Zealand wood products range between approximately 5.5% and 11%, making tariff removal considerably more important for processed products competing on tighter margins than for the established bulk log trade. Crucially, the increase to NZ$193 million occurred before those tariff concessions became effective. India has therefore tripled its purchases from New Zealand without the principal commercial benefit of the agreement yet being available.<\/p>\n The bigger opportunity is not another surge in log exports<\/strong><\/p>\n For New Zealand's wood industry, the attraction of India is consequently not simply the possibility of replacing some Chinese log demand with Indian log demand. The more valuable opportunity would be to change what New Zealand sells. Logs currently account for almost two-thirds of wood exports to India, while the processed categories that retain more manufacturing value in New Zealand remain comparatively small. The Wood Processors and Manufacturers Association has been explicit that improved market access should create opportunities for lumber and other manufactured wood products, particularly as New Zealand seeks to expand value-added exports rather than continuing to rely heavily on the shipment of unprocessed logs.<\/p>\n There are already indications that Indian buyers are looking more closely at New Zealand mills. Enquiries increased following the signing of the trade agreement, while industry estimates suggest Kandla alone could eventually absorb substantially larger radiata pine volumes under favourable market conditions. But increasing log shipments would reproduce the same basic export structure that New Zealand has with China. Developing a significant market for processed radiata would provide a different benefit: more value would remain with New Zealand sawmills, dependence on Chinese roundwood demand would decline and exporters would gain access to a large construction and manufacturing economy whose timber consumption remains relatively underdeveloped on a per-capita basis.<\/p>\n China and India are therefore becoming important to New Zealand for different reasons. China remains the indispensable market of the present, providing the scale and daily liquidity required to absorb New Zealand's export log production. At around US$125\u2013130\/JAS m\u00b3 and 55,000 m\u00b3 of daily softwood log consumption, it is currently stable enough to keep the market balanced, although expensive freight and currency movements are limiting returns to New Zealand exporters. Its longer-term risk lies in greater domestic Chinese timber availability and the possibility that locally produced logs gradually displace imported material at the lower end of the market.<\/p>\n India is still a smaller and much less predictable market, but it offers the greater potential for change. The immediate Kandla market is weak, inventories are excessive for current demand and mills are struggling with the relationship between log and lumber prices. Yet New Zealand wood exports have already tripled in three years, and that happened before the removal of tariffs promised under the new trade agreement. If India returns to stronger buying after the monsoon and the FTA subsequently improves the economics of processed timber exports, the next stage of growth could look very different from the first.<\/p>","protected":false},"excerpt":{"rendered":" New Zealand’s export log market is entering spring with China providing a relatively stable outlet while India remains caught in its seasonal slowdown. Chinese softwood inventories are contained, daily log consumption is holding at around 55,000 m\u00b3 and New Zealand … Continue reading