Gordon Campbell | Parliament TV | Parliament Today | News Video | Crime | Employers | Housing | Immigration | Legal | Local Govt. | Maori | Welfare | Unions | Youth | Search

 

Mixed times ahead for country’s forest industries

21 December 2004

Mixed times ahead for country’s forest industries

Ministry of Agriculture and Forestry (MAF) forecasters expect export volumes for logs to increase only slightly over the next two years, as harvests slowly pick up again following a much-reduced harvest this year but by 2007/08 exports are likely to return to levels that follow historical trends.

The Ministry’s latest Situation and Outlook for New Zealand Agriculture and Forestry (SONZAF) report into forestry production says demand for lumber in key markets will grow, and prices, while not spectacular, are expected to grow out to 2007/08

Prices for pulp and paper are, however, headed for a cyclical downturn during the outlook period, and a lack of growth in processing capacity is likely to constrain any significant growth in volumes.

The report’s author, Senior Policy Analyst John Eyre, says demand for wood panels is expected to remain steady and fairly strong with significant building activity in Australia and strength in the furniture sector in China and Japan.

SONZAF is an annual roundup of New Zealand’s main agriculture and forestry industries, covering the major issues and trends, the current situation and the medium-term outlook. Each article is written by an industry specialist, and incorporates both modelled price, production and export projections with industry intelligence.

One particular feature of SONZAF is that it includes projections based on two alternative exchange rate tracks as well as the main projections. This enables readers to better understand the prices that could result should exchange rates differ from those used in the main projections.

The report details how some major growers, most notably Carter Holt Harvey and Kaingaroa Timberlands Management, have this year drastically reduced their levels of harvest in order to increase the age profiles of their tree crops.

This has, in turn, reduced the volumes of logs exported, and, John Eyre says, will affect projected exports during the outlook period.

“This reduction will begin to be reversed during 2005/06 with some small increases in log export volumes expected,” he says.

Total production of lumber is projected to climb steadily with exports expected to increase as mills respond to continuing demand from Australia and the United States.

“Recent hurricanes in the southern states of the US have restricted local supplies of lumber, and repairs to hurricane damage could well boost demand for our product,” John Eyre says.

And he says New Zealand companies supplying the Australian non-residential building sector will be heartened by the latest activity forecasts by forecasting agency BIS Shrapnel. In a September report the agency points to favourable times ahead with non-residential building activity in Australia expected to enter a major cyclical upswing.

Looking at prices, John Eyre says despite strengthening towards the end of 2003/04, US dollar prices for logs are showing signs of falling away and market conditions suggest, at best, a static market, and in fact indicate a weakening market is more likely.

“Our projections are for price reductions in the order of five percent possible through 2005/06 while beyond that US dollar (USD) prices should rise in the order of four to five percent,” John Eyre explains.

Lumber price indices are at their highest since 2001/02, but there are indications prices are beginning to plateau. “A dip in lumber prices in 2005/06 could be on the cards.”

With wood products, the report says a depressed world economy over the last couple of years has adversely influenced demand for packaging and printing materials, which, in turn, has depressed demand for pulp.

“With a stable domestic market, this has limited the opportunities for increasing production,” John Eyre says.

“And weak demand in international paper markets, again stemming from soft economic situations, has seen New Zealand processors competing with a world excess volume.”

A bright spot is in the wood-based panels area, where both a strong domestic building sector and export demand has driven a healthy increase in the production of products such as MDF, plywood and particleboard.

Looking again to the future, John Eyre says production of both pulp and paper will be constrained by industry capacity and pulp prices are in a downward cycle.

Paper too is in a price trough which is expected to last through 2006/07, but Mr Eyre says a cyclical recovery in USD prices could start during 2007/08.

Prices for wood-based panels are projected to rise modestly throughout the period.

ENDS



© Scoop Media

 
 
 
Parliament Headlines | Politics Headlines | Regional Headlines

Gordon Campbell: On Vulnerable Kids, RNZ Funding, And Poppy

The decision to remove the word ‘vulnerable’ from the Ministry for Vulnerable Children could well mark a whole shift in approach to the care of children in need.

And I’m hedging with the ‘could well’ only because the Ardern government hasn’t yet spelled out whether the name change it has announced will also involve a rejection of the controversial use of Big Data to try and predict those children deemed to be at highest risk of inter-generational reliance on welfare support. More>>

 

Principals' Federation: End Of National Standards

Today the Minister of Education announced that the Government has stopped the controversial National Standards system of assessment and declared them an arbitrary measure which did not raise children's achievement as the previous Government intended. More>>

ALSO:

Public Good: People’s Report On Public Broadcasting And Media Presented

The People’s Commission on Public Broadcasting and Media, was crowdfunded and was informed by an extensive consultation, seeking the views of both those working in Media as well as gathering input both online and in person from ordinary Citizens. More>>

ALSO:

RBNZ To RNZB: PM's Press Conference

Prime Minister Jacinda Adern was joined by Minister of Finance Grant Robertson and Minister for Children Tracey Martin to announce the appointment of Adrian Orr as the new Governor of the Reserve Bank and the name change of the Ministry for Vulnerable Children to ‘Oranga Tamariki - Ministry for Children’. More>>

ALSO:

'Taming Globalised Capital': Why Is Labour Supporting Investment Rules In WTO?

‘Today, we learned the new government has added New Zealand’s name to a proposal designed to lead to foreign investment rules in the WTO at this week’s ministerial meeting in Argentina,’ said Auckland University Professor Jane Kelsey. More>>

ALSO:

Gordon Campbell: On The Politics Of Scaring Voters Back Into Line

Fear has always been a useful mobilising tool in politics… yet in 2017, bogeymen of all shapes and sizes seem to have fallen on hard times. For years, the National party had painted itself as being the only reliable defensive bastion against the terrifying prospect of a centre-left government… More>>

ALSO:

Gordon Campbell: On Drinking Water As A Failure Of Political Leadership

It is almost possible to feel sorry for the Health Ministry in their terrible, no good, very bad week... More>>

ALSO:

 
 
 
 
 

LATEST HEADLINES

  • PARLIAMENT
  • POLITICS
  • REGIONAL
 
 

Featured InfoPages