ANZ: Local Prices Lift as Export Prices Fall
Wednesday 11 Aug 2021(ANZ) The premium for exporting logs rather than selling them locally is rapidly eroding. Domestic demand for timber is strong and mills are finding they are able to pass on their higher costs. Meanwhile, after a long run of elevated prices Chinese demand for logs has waned. This is not unusual at this time of the year, but the closure of some of China’s mills has further eroded short-term demand for logs. The strength of the domestic market, combined with the challenges and cost of getting product to export markets, may mean more of our home-grown timber stays on our shores.
Export prices under pressure – In-market prices have eased after peaking at about USD194 per JASm3 last month. The value of a log delivered to China is now about USD10 lower than this, and further downwards price pressure is expected.
This follows nine months of elevated prices that have favoured our growers and exporters. Chinese buyers are finally pushing back on the prices being asked for by NZ exporters.
A number of factors have reduced the immediate demand for logs in China. Firstly, the quantity of logs being utilised in China tends to fall away at this time of the year as construction activity slows during the very hot summer months. This typically results in stocks of logs building on the wharves of Chinese ports. This season the quantity of logs being utilised is even lower than normal.
Source: ANZ Research Agri Focus
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