In market prices have firmed a little further over the past month. Total demand from China has eased back but demand for New Zealand logs is relatively high compared with other sources. At present logs sourced from the Pacific North West (PNW) are too expensive for the Chinese market and therefore the cheaper radiata logs from New Zealand are given preference.

While higher prices may seem desirable for exporters, if in-market prices move up significantly then New Zealand is likely to lose market share to competing northern hemisphere suppliers. At present inventory levels in China are estimated to be around 2.8 million cubic metres. This is sufficient to meet current demand levels but significant stocks have not build up.

Demand for logs within China is subdued at present with the future trend dependent on government spending. The Chinese government recently announced a stimulus package which is designed to boost consumer spending within China. This package includes interest rate cuts which should help the building sector along.

The Agrifax Log Price Indicator moved up 3 points this month to 82 points. Prices were generally firmer across most grades of logs and across all regions. Prices were led upwards by higher returns for export grade logs. The New Zealand dollar depreciated further over the past month and dipped to its lowest level recorded this year.

Shipping prices have also eased in favour of exporters. Domestic grade log price movements were mixed depending on grade and region. Pruned log prices firmed slightly in most regions over the past month. Pulp prices generally softened as supply exceeds current demand. Recent demand for logs for pulp and paper production was constrained by the extended seasonal closure of the Kinleith mill in the central North Island.

Demand for roundwood firmed in most regions. The Agrifax Log Price Indicator is currently 10 points lower than it was at the same time last year and below the yearly averages for both 2011 and 2010.

For more detailed reports contact NZX Agrifax at www.nzxagri.com/agrifax
 
The Agrifax log price data is a weighted average of prices collected each month from a range of New Zealand log buyers and sellers. Log prices shown in the table will vary regionally and by supplier and should only be used to provide a broad trend of log price movements.