New Zealand log price index for September
Market Summary
AWG prices for export logs from North Island ports in September were similar to AWG prices in August, while log exporters reduced AWG prices from South Island ports. Demand for logs from China remained at a steady level.
New Zealand's domestic market is showing signs of recovery, but global demand for sawn timber is declining.
The PF Olsen Log Price Index remained unchanged at US$114 in September.
The index is currently US$5 below the two year average and US$8 below the five year average.
New Zealand Domestic Log Market
Log supply has become tight in some areas as smaller forest owners have slowed or stopped harvesting production.
The New Zealand market expects reasonable demand for sawn timber for summer construction and DIY projects.
European demand for New Zealand pine clear sawn lumber boards has fallen for the first time in some time and sales orders have been significantly reduced. This market has been performing well for NZ steel mills in recent years so this is a concern. Hopefully this is just a temporary imbalance between supply and demand.
Global sawn timber prices continue to fall due to reduced demand. Just like New Zealand, global demand for sawn timber is very sensitive to interest rates. Especially with the perception of rising interest rates for the foreseeable future. New Zealand sawmills have had to adjust to a decline in the 'average basket price' of processed logs.
Export Log Markets - China
China's radiation log stocks have been reduced to around 2.5 million cubic metres. Daily port traffic remains in the range of 600,000-70,000 cubic metres per day, which is normal for China at this time of year.
Currently, the CFR price for A-grade logs from China is US$110-115 per JASm3.
The market is expecting log arrivals from New Zealand to be around 1.4 million cubic metres in September.
This is still slightly below demand, but is not a concern as China's National Day Golden Week holiday from 1 October approaches.
The cost of transporting logs from New Zealand's North Island to China continues to rise, with freight rates ranging from the low to mid $30s per JASm3.
During the New Zealand winter, the difference in transport costs is always greater in the South Island than the North Island due to the heavier logs. Costs for ultra-handysize vessels have risen faster than for handysize vessels. The average waiting time for vessels in Tauranga harbour is ten days.
The Baltic Dry Index has risen to its highest level since May and bunker prices continue to rise. Demand for Chinese coal imports has increased this year compared to last due to reduced domestic coal production and lower hydrothermal energy production. Transport costs from New Zealand are under increased pressure.
PF Olsen Log Price Index - September 2023
The PF Olsen Log Price Index remained unchanged at US$114 in September. The index is currently $5 below the two-year average and $8 below the five-year average.
