NZ Forest Products – December 2019 Monthly Market Report

Some market aspects are positive as we move into the festive season, some are not so good but hopefully, we have turned the corner to a brighter future. I can state the domestic market is stable and strong with good demand flow. Forest owner prices stable at a good volume. Logging crews are predominantly getting good quality stock. This means production rates are generally ensuring as adequacy of supply although some mills report supply is stable and keeping up with demand. Export log prices levelled in December reflected but a drop in shipping globally due to Oil prices reducing meaning shipping costs became more palatable. The sales prices in China in US$ terms did not change and for the moment and remain stable.

Current wharf gate sales levels at NZ ports are likely to remain stable in the current market. During the first quarter of 2020, there will be still problematic to price levels with Spruce log and lumber continuing to flood the china market. The current sales prices of Spruce are below NZ Radiata pine. However, lumber sales from China sawmills have been declining. This means China traders are continuing to operate on slim margins across the board.  Shipping costs and inevitability appear to be rising yet again due to seasonal adjustment.

Volume usage remains about 55,000 cubic metres for day. This compares with 80,000 cubic metres per day at the same time in 2018. The China Eastern seaboard inventory is around 3.5-3.6 million cubic metres. This compares to 2.5 million at the same time last year, so is not overboard by any means. Most medians are suggesting a positive beginning for the NZ Forest Industry in 2020.

So to conclude from a turbulent year in the bush Merry Christmas to everyone and a happy new year I look forward to bringing you more of my ramblings throughout 2020 and lets hope we have a smoother run in 2020.

Keep on Hauling and looking to the future as always