New Zealand log prices continue to recover from price drop triggered in November when inventories at China's ports reached four million m3
DUNEDIN, New Zealand
February 24, 2012
– In-market log prices have gained a little this past month, the fourth consecutive lift since a massive drop in November. Although the lift was only $2 and $1 dollar for KS and KI logs respectively. A grade logs are now at US$130/JASm³ CFR in-market. Wharf gate prices for logs in NZ are down slightly on last month, one or two dollars. This could possibly be explained by the jump in the NZD/USD exchange rate that has gone up over 0.83 cents and remained there for some time.
Inventories in China have built up over the Chinese New Year period; it was expected several months ago that this would happen. Although inventories are expected to reach over 4 million cubic metres by March, the level that tipped the market into a sharp downward fall last November. It is a different situation this time. China is coming out of winter, after the holiday break. Consumption should be lifting so this will help move logs off wharfs and get stocks down to more balanced levels.
The Agrifax Log Price Indicator has softened this month with a slight decrease across the board for most log grades and in all regions. Most price drops were of only a few dollars, but combined this has seen a slight easing. Price drops were mostly associated with the high New Zealand dollar, and some over supply issues in markets. With the decrease in off take from stocks in China due the Chinese New Year holiday this has meant that stocks were able to build to a very high level and price reductions may be needed to clear this in time before any down grade in log quality occurs.
For more detailed reports contact NZX Agrifax at www.nzxagri.com/agrifax