September has confirmed in my opinion we have hit the bottom in respect to CFR Prices in China with the price remaining around the 110 -112 USD however this wont be seen in an uplift AWG prices in the domestic market as its been remove from the equation by slightly higher shipping prices . In fact with the Saudi situation and the closing of two oil fields this just might be the beginning of higher fuel charges being reflected back to Exporters in the fact the fuel surcharge is sure to increase.
The inventory in China has reduced slightly over the month of August and at this point in September as I’m writing this is sitting at about 4.5 Million Cubic Meters on the wharfs on the Eastern Seaboard combined
The current take off volumes are approximately 90,000 tons per day which is up on last month by about 15% possibly reflected by the change in climate in China and the fact that work longer during the Autumn periods and are no longer taking time off work due to heat.
China in general has seen some economic decline in recent months and is still showing the pains of additional tariffs imposed from the USA
I believe we will still have the consequences of over supply for some time to come and this won’t be changing any time soon with a lot of Logging Crews now feeling the bite of what can be only called irresponsible trading previously.
New Zealand has an estimated 400 to 450 logging crews and from my discussions around the upper north Island there are some 70-90 logging crews either out of work or working on limited hours. This for most operators means harsh realities especially when it comes to quality of life and lets not forget the need to pay the finance man for that iron we all so dearly love. This has a twofold impact the initial one is the investment into new equipment with some machine importers now facing cancelled future orders, secondly it also means the harsh reality of second-hand equipment loosing value both on the domestic and international markets with older equipment around the 15-20,000 hr mark becoming redundant and virtually impossible to sell. Forestry Exporters need to do what ever they can to keep a steady and consistent work environment a boom bust environment that we have just seen and have also seen in the years gone by needs stability to ensure continued investment and industry growth.
I am however confident that as I have previously stated I think over the next 6-9 months prices will come up hopefully to something sustainable for all concerned to the 120 CRF USD
However, it yet to be seen and it is pretty much guesswork
That’s it from me for another month lets see what the future brings
