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Log export prices rise again

 

New Zealand export log prices have advanced for a fifth month as a decline in shipping costs bolstered local returns and offset weak prices from China, the country's largest market.

The average wharf gate price for New Zealand A-grade logs rose to $NZ101 ($A94) a tonne in December, from $98 a tonne in November, according to AgriHQ's monthly survey of exporters, forest owners and sawmillers.

The AgriHQ Log Price Indicator, which measures average log prices weighted by grade, advanced to 94 from 92.7 in November.

New Zealand log returns were bolstered in the month by a fall in shipping costs following a collapse in oil prices and a decline in the New Zealand dollar. The kiwi averaged US82.42 cents in December, down from a peak of US88.35c in July, according to Reuters data.

Still, prices in China remained lacklustre as demand continues to be weak heading into a seasonal slowdown for winter and Chinese New Year.

"Returns to New Zealand exporters increased due to further drops in shipping costs brought on by the drop in global oil prices," said AgriHQ forestry analyst Ivan Luketina. "In China, building activity is going into its seasonal low patch, which will put further downward pressure on prices there.

"Currently prices in China are below October's price, but it's being more than offset by the fall in shipping costs and the New Zealand dollar. This creates the potential for oversupply in China," he said.

In the New Zealand domestic market, sawn timber production in the third quarter was the highest in four years amid expectations for increased building activity over the New Zealand summer, Mr Luketina said, citing Ministry for Primary Industries figures.

Wood is New Zealand's third-largest commodity export.