Sharechat Logo

NZ export log prices slip on higher shipping rates, weak overseas demand

Monday 21st March 2016

Text too small?

New Zealand export log prices slid this month as shipping rates edged up on higher oil prices and amid weak demand in overseas markets.

The average wharf-gate price for New Zealand A-grade logs declined to $119 a tonne in March, from $122 a tonne in February, according to AgriHQ's monthly survey of exporters, forest owners and saw millers.

Low oil prices have pushed shipping rates to record lows, underpinning export returns for New Zealand logs. However oil prices edged up about US$8 a barrel in the past month, signalling shipping rates, while still low, may have reached their bottom.

The in-market price of A-grade logs in China, New Zealand's largest market, fell to US$107/JAS from US$111/JAS last month following a slowdown in activity during the Chinese New Year holiday. Log inventories on Chinese ports stood at 2.9 million to 3.6 million cubic metres, up from 2.6 million to 2.8 million cubic metres last month, although lower than the 4 million cubic metres of inventories recorded at the same period last year. The kiwi dollar slipped 1 percent against the greenback over the month, and is down 11 percent over the year, making the country's exports more competitive.

"Wharf gate prices softened slightly as a result of the weaker overseas market, but both the New Zealand dollar and shipping rates continued to aid returns for exporters, keeping prices supported," AgriHQ analysts Shaye Lee and Reece Brick said in their report. "Some of the bottom end has come out of shipping rates, largely due to lifting oil prices. However the mid-range for spot prices continues to be very low, and is on-par with what was seen the month prior."

Spot shipping rates have ranged between US$10 to US$15/JAS over the past month, with more recent rates generally at or above US$12/JAS, AgriHQ said, citing people in the market it didn't identify.

Still, the analysts said there are reports of large volumes of wood heading to China at present, so the market may not be as positive in the coming month or two. 

Meanwhile, in the New Zealand domestic market, structural log prices held at $109 a tonne, the highest level since August 2014, bolstered by record levels of housing permits and limited availability of supply.

"Tight supply and solid demand meant further upside has been observed in the New Zealand domestic market," the analysts said in their report. "The consistent release of housing permits out of Auckland has kept the upwards pressure on structural log prices in the North Island, however the situation is softer through the South Island where fewer permits are being released."

Pulp prices remained largely unchanged amid "decent demand" and as more woodchips become available from the recently opened cubed lumber mill in the central North Island. Roundwood prices were stable as increased demand from the horticulture, sheep and beef industries offset weaker demand from the dairy sector, AgriHQ said.

Forestry products are New Zealand's third-largest commodity export group behind dairy and meat products. The latest trade data for February is due out on Thursday.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Tourism Holdings shares fall to 6-week low as US margins shrink
Venture capitalists split on govt picking winners
21st October 2019 Morning Report
Kiwi dollar steady as markets await Brexit developments
Domestic AGMs, multi-national earnings to provide economic insights
MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
MARKET CLOSE: Blue-chip stocks Meridian, A2 lead market lower
NZ dollar rises on Brexit hopes, rate cut reassessment
Three not failing, just needs a new owner - MediaWorks CEO
Major investors back new CBL class action targeting directors

IRG See IRG research reports