Com­pe­ti­tion pushes struc­tural log prices to new record

New Zealand Logger - - Forest Talk -

STRUC­TURAL LOG PRICES ROSE TO A NEW RECORD IN NEW Zealand last month af­ter lo­cal sawmills scram­bled to se­cure sup­ply in the face of com­pe­ti­tion from over­seas buy­ers so they can meet de­mand from lo­cal builders.

The price for struc­tural S1 logs moved up to $127 per tonne, a rise of $3 on the pre­vi­ous month and $12 higher than a year ear­lier, ac­cord­ing to the monthly sur­vey of ex­porters, for­est own­ers and saw millers car­ried out by AgriHQ.

Lo­cal tim­ber pro­duc­ers, es­pe­cially those in North­land and some parts of the South Is­land, have been fight­ing for log sup­plies with ex­porters over the past year, com­plain­ing that they have not been get­ting a look in as log trucks drive past their gates on the way to the port.

The re­sponse has been to drive the price up in or­der to ob­tain suf­fi­cient logs as the build­ing boom in Auck­land shows lit­tle sign of abat­ing and mi­gra­tion lev­els con­tinue to drive de­mand.

This sit­u­a­tion has seen the price for S1 logs rise above the price of ex­port A-grade logs in AgriHQ’s lat­est data for the first time since late last year.

“A con­sis­tently firm­ing ex­port log mar­ket has driven in­creases in struc­tural log prices in re­cent months, though pos­i­tive hous­ing con­struc­tion rates lo­cally have been key to mills be­ing able to stom­ach th­ese in­creases,” says AgriHQ an­a­lyst Reece Brick.

“The short-term out­look is for ei­ther a steady or slightly firmer mar­ket, where the ex­change rate move­ments will likely be key to the com­pet­i­tive pres­sure be­tween the lo­cal and ex­port mar­kets.”

He goes on to say that the clos­ing val­u­a­tion be­tween wharf gate and do­mes­tic val­ues may in­di­cate some sta­bil­i­sa­tion in the mar­ket to­wards the end of the year, as­sum­ing no ma­jor change oc­curs in the ex­port mar­ket.

Mean­while, log val­ues at the wharf gate slipped by around $2 per tonne as a re­sult of a rise in the ex­change rate with the US dol­lar that saw it reach a 28-month high of US75 cents at one point, be­fore fall­ing back a cou­ple of cents. Ex­porters will be watch­ing events in the US to see what ef­fects there will be on the dol­lar in the com­ing months.

De­mand for logs over­seas re­mains buoy­ant, es­pe­cially in China, even though the stock lev­els at most of the ports has risen to wor­ry­ing highs again.

The price for un­pruned log grades rose US$2/JAS in Au­gust, which marked the 13th con­sec­u­tive month of strong pric­ing.

Sta­ble oil prices have kept ship­ping rates at sim­i­lar lev­els to pre­vi­ous months and th­ese are ex­pected to con­tinue in the short-tomedium term, but th­ese could be af­fected if OPEC mem­bers agree to limit oil sup­plies.


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