Export log prices hold steady amid improved demand

New Zealand export log prices held steady this month as improved demand offset an increase in shipping costs.

The average wharf gate price for New Zealand A-grade logs was unchanged at $119 a tonne in April, from March, AgriHQ's monthly survey of exporters, forest owners and sawmillers shows.

The in-market price of A-grade logs in China, New Zealand's largest market, rose to $US111/JAS from $US107/JAS last month as demand picked up following a slowdown in activity during the Chinese New Year holiday.

Log inventories on Chinese ports stood at 3.6-3.8 million cubic metres, with 60,000 tonnes a day moving off the wharves, marginally less than the volumes arriving at ports.

"With the Chinese New Year period well and truly passed, activity has increased in the Chinese market," AgriHQ analysts Reece Brick and Shaye Lee say.

"The build-up of inventories on port this year did not reach the high levels observed in previous years, largely due to the lower volumes hitting Chinese ports from New Zealand prior to this period, coupled with a faster recovery in market activity after the holiday.

"General demand out of the Chinese market has been relatively positive. While there are still concerns around the Chinese economy’s stagnation of growth, stimulus packages being pushed through by the government are aiding interest from Chinese buyers."

Shipping prices edged up this month due to increased oil prices and as fewer ships visited New Zealand because of a decline in the importation of products such as palm kernel and fertiliser, AgriHQ says.

"Ships which cart these products to New Zealand often load up with logs to take to export markets before leaving New Zealand," the analysts say.

"Therefore price competition among these ships capable of carting logs from New Zealand has not been as intense as would otherwise be the case, placing upwards pressure on prices."

Meanwhile, in the New Zealand domestic market, structural log prices are being underpinned by increased demand from the construction sector, while for roundwood a lift in demand from the horticulture and viticulture industries is offsetting a decline in demand from the dairy industry. The pulp market was steady, AgriHQ says.

Forestry products are New Zealand's third-largest commodity export group behind dairy and meat products.

(BusinessDesk)