Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

NZ structural log prices hit 25-year high

NZ structural log prices hit 25-year high as local mills compete with export market

By Tina Morrison

June 25 (BusinessDesk) - New Zealand structural log prices rose to the highest level for 25 years as local mills compete with the export market to secure supply for the domestic construction market amid strong demand from China.

The average price for structural S1 logs increased to $135 a tonne this month, from $134 a tonne last month, and marking the highest level since 1993, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. The average price for New Zealand A-grade export logs hit a four-year high of US$145/JAS from US$144/JAS last month, and US$132/JAS a year ago.

In New Zealand, sawmills are competing with the export market to source logs for local construction, at a time when demand in China has stepped up after Asia's largest economy clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market.

"Export markets have remained an enticing avenue for log traders and there’s little to suggest this will change in the coming months," AgriHQ analyst Reece Brick said in his report. "China’s appetite for NZ logs means it’s still the price-setter for sales into other countries."

Nearly all AgriHQ survey respondents reported steady or marginally firmer pricing across structural S1 logs in the latest market survey, Brick noted.

The winter weather had slowed harvesting in some areas but had come at an opportune time as some North Island mills were experiencing softer-than-expected local demand for structural timber due to caution across the New Zealand housing sector, he said.



"Whether or not harvesting remains disrupted in the coming weeks is unlikely to make much difference to the medium-term direction of the domestic sales," Brick said. "The pull of the export market is still pushing forest owners to try and negotiate contracts at or near the export market level. This is a situation that is very unlikely to change in the next few months."

The volume of logs being taken from Chinese ports had slowed as a result of shorter working hours due to hot summer temperatures, however isn't uncommon at this time of year and coincides with slower harvesting in New Zealand, which should keep the market in balance in coming months, Brick said.

Forest products are New Zealand's third-largest commodity export group behind dairy and meat products. Trade data for May is due out Wednesday this week.

(BusinessDesk)

ends

© Scoop Media

 
 
 
Business Headlines | Sci-Tech Headlines

 

Real Estate: Auckland House Price Deflation Accelerates

The decline in Auckland house prices is starting to accelerate as the number of house sales plummet, not just in Auckland but in most parts of the country. More>>

ALSO:

'Wellbeing Budget': Grant Robertson Pre-Budget Speech

There has been a fair amount of attention in the media here and internationally on this year’s budget – our country’s first Wellbeing Budget. Enough for me to be invited to the recent Spring Meetings of the World Bank and International Monetary Fund, to talk about our approach... More>>

ALSO:

New Vodafowners: Vodafone Sale To Infratil Consortium

Vodafone Group Plc has today announced the conditional sale of 100% of Vodafone New Zealand Limited to a consortium of long-term investors, New Zealand-based Infratil, and Canada-based Brookfield Asset Management. More>>

ALSO:

Ice Cream: Global Giant Buys Tip Top From Fonterra

Froneri has today agreed to acquire the iconic New Zealand ice cream business Tip Top from global dairy co-operative Fonterra with completion expected by the end of the month. More>>

ALSO: