NZ export log prices increase in October as Chinese inventories decline
By Tina Morrison
Oct. 20 (BusinessDesk) - New Zealand export log prices increased this month as inventories reduced on Chinese ports on lower volumes and a pick up in demand.
The average wharf gate price for New Zealand A-grade logs rose to $83 a tonne from $82 a tonne in September, according to AgriHQ's monthly survey of exporters, forest owners and sawmillers. The AgriHQ Log Price Indicator, which measures log prices weighted by grade, increased to 88.41 from 87.83.
Prices for New Zealand export logs are largely determined by China, the country's largest market, where weaker demand has seen a build up of inventories. A decline in the number of logs sent to China and a pick up in demand has reduced inventories on Chinese ports to 3 million cubic metres from 4.7 million cubic metres in August, which is supporting prices.
"While credit lines are still posing problems, consumer confidence has lifted which has helped bolster domestic demand within the Chinese market," said AgriHQ analyst Emma Dent. "Should volumes to China remain low, and off-take from ports hold at steady levels, price increases are likely."
Still, while most participants in the survey are expecting price increases, the market remains volatile and uncertain, Dent said.
Prices and inventories heading into the Chinese New Year period in February, when ports are closed, will play a strong role in determining how the market plays out next year, she said.
Meanwhile, prices for New Zealand domestic logs were steady this month with pruned logs at $164 a tonne, structural logs at $105 a tonne, and pulp logs at $50 a tonne, according to the survey.
Logs, wood, and wood articles are New Zealand's third-largest commodity export behind dairy products and meat.