NZ Forest Products – February 2020 Monthly Market Report

The NZ Forest Industry is about to see some of its most challenging times ahead as China starts to struggle with the Corona Virus outbreak at Hubei.

Our reliance on China is greatly affected both with the inability to obtain machinery parts from China along with the reduced demand for all products from abroad including wood fibre. As China workers have stayed at home recently rather than risk a pandemic spread consumption has dropped dramatically.

The Timber industry across the board has come to a virtual halt, sales have plummeted no near nil. Inventory has built although not to the extent we had expected to see. This is due to primarily a lack of staff to unload vessels as it is about off port sales.  There is also some concern about the bank’s reluctance to issue LC’s where customers struggle to provide satisfactory credit lines. For the immediate future for February/March sales, most agree there is no point discussing price when there is no ability to get a contract or LC.

For those producing products for export, the impacts are immediate and brutal. Whilst our company is in a very favoured position with long-standing associations in China, nothing can be currently achieved until there is some normality. This means harvesting crews will be back on short work weeks once again. For some companies, it is a total stand-down. For the first time sales including exports, NZ Forestry Inc has finally chosen to work together even if only by market forces which provide very few other options at his time.

For the first time, we need to drop production dramatically till it’s economic to cut you can go fishing and go broke you don’t need to go to work and pay to do it and it.  There are no gains here to be had only heartache for all those heavily invested in this industry. The aspect that impacts China and all nations at this time  is confidence. China customers monitor our port deliveries as we also watch their off-port sales. The upside of the equation of all of this is shipping costs are falling  and the NZ dollar is dropping in value against the US dollar. This will help to reduce the AWG NZ impact.

Notwithstanding this, contacts in China are suggesting the rate is well above that being report.  True death numbers not really known.  There is no Vaccine available and its unlikely there will be any for some time. I urge all of New Zealanders to pressure the government to close our borders urgently. This could easily become a worldwide pandemic not only destroying family and business but maybe the catalyst of the greatest depression ever seen globally since the 1930s.

As always keep on Hauling and looking to the future.