Can New Zealand become more than a log exporter?
NEW ZEALAND FORESTRY WILL remain vulnerable as long as its fortunes are tied to exporting a commodity that is subject to wildly fluctuating demand and prices.
PF Olsen’s retiring CEO, Peter Clark, believes it is possible for the industry to wean itself from some of the commodity business in the future and make more finished products here, but reckons we will still need to export a certain amount of logs.
“We’ll always be a log exporter, because the industrial grade logs are really hard to make profitable products from in a New Zealand sawmill and sell them against Canadian ‘sausage mills’, which are much more efficient and faster,” he says.
Some of those industrial-grade logs we export now could be diverted to be made into the new engineered wood products being introduced to market, such as Cross Laminated Timber (CLT) panels.
Chinese board manufacturer, Fenglin, will also soak up some of the central North Island supply for its planned mill at Kawerau. And he thinks there are opportunities for Bio Char
and Activated Carbon made from wood.
But as long as wood processors in China are prepared to pay US$100 for chip logs it will be hard for any New Zealand mill to compete against the Chinese advantage of being very close to the end market or the massive Canadian and Russian producers.
Above: Logs exports will still form an important part of the forestry business in New Zealand for many years to come, says Peter Clark.