Export demand pushing up NZ timber prices

By Ben Chapman-Smith

Demand for New Zealand log exports is pushing up the price of local timber. Photo / Mark Mitchell
Demand for New Zealand log exports is pushing up the price of local timber. Photo / Mark Mitchell

Strong overseas demand for New Zealand logs is putting pressure on the local supply and pushing up timber prices for consumers.

According to the Ministry of Primary Industries, New Zealand has experienced strong demand from China for its logs in recent years and this is expected to continue.

While good for export values, the increased demand means people at home are paying more for timber as wood processors here try to secure supply.

Paul Taylor, ITM's general manager of marketing & operations, said timber prices on the yard had generally gone up about 5-10 per cent this year.

"The current increase is due mainly to the increasing cost of logs to sawmills," he said.

"This is being driven primarily by demand from Asia, combined with reduced log supply to China from North American sources."

Much of the timber that would have traditionally gone to China from North America was been diverted to meet the rebounding US housing market, Taylor said.

Kiwis buying timber would notice a dent in their wallet.

The approximate timber value in a 230 - 250m2 house was $12,000, meaning the impact of the timber price increase would be about $600 - $1200, he said.

Fletcher Building - which sells timber through PlaceMakers - also reported an increase in timber prices.

"We have seen domestic wood prices increase by approximately 7 per cent in the past month, in line with an international increase in log prices," said general manager of investor relations Philip King.

The latest ANZ Commodity Price Index showed even though China imported fewer logs from New Zealand in May, log prices still jumped 11 per cent.

King believed the increase had been largely driven by the improved demand in the US.

In a report released yesterday, the Ministry of Primary Industries (MPI) estimated that log export volumes would be 7 per cent higher in the year ending June 30 than the previous year.

It also predicted log exports to rise to $4.29 billion in the year, from $4.27 billion a year earlier.

As well as China, demand was also increasing from Russia, MPI said.

Taylor said the prices that merchants like ITM paid for timber were set by the individual sawmills.

The sawmills were heavily influenced by what they had to pay for logs and by the level of activity in the market, he said.

"What price ITM sells timber for is determined by our individual store owners."

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