Log prices spurring recovery in the regions

Wednesday 7 Apr 2021

Dairy may be the backbone of the economy, but forestry is helping power a recovery in regional New Zealand as log prices soar on the back of demand from China, strong domestic construction activity and tight global supply.

In the latest ASB Regional Scoreboard, the two top spots in the rankings were held by the forestry powerhouses of Northland and Gisborne. The NZ Regional Economic Scoreboard takes the latest quarterly regional statistics and ranks the economic performance of NZ’s 16 regional council areas.

Meanwhile, ASB Bank’s forestry indices lifted 5% in New Zealand dollar terms over Q4 2020 and then a further 6% over Q1 this year. The index is currently $10 above the two-year average, $6 above the three-year average, and $6 above the five-year average, it said.

More upside to come - Prices aren’t too far off the highs they hit back in 2018-19 and “we see further upside for log prices this year. China is the destination for more than 56% of forestry exports, so it will remain in the driver’s seat over the rest of 2021,” it said.

According to PF Olsen – a provider of independent professional forestry services – the PF Olsen Log Price Index remained at $130 in March due to the stable at wharf gate or AWG prices. The cost and freight prices for New Zealand pine logs in China has increased approximately US$5 over the last month and is still increasing, it said.

The price for A-grade logs is now around US$158 per Japanese Agricultural Standard (JAS) cubic metre and log exporters will continue to ask for increased pricing to compensate for increased shipping costs.

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Source: BusinessDesk



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