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Home / Business

Battle forecast for forestry sector exports

30 Jun, 2000 03:24 AM3 mins to read

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By Greg Ansley

CANBERRA - The New Zealand forest products industry will increasingly be forced into huge capital investment programmes to develop new markets as local competition increases across the Tasman, according to a new Australian analysis.

New Zealand exporters will also be competing in a global trade burdened by rising supplies and the medium-term impact of the Asian crisis - including declining demand for Radiata pine in Japan.

The manager of the Australian Bureau of Agricultural Economics' (ABARE) forestry economic section, Graham Love, told the annual Outlook forecasting conference in Canberra that difficult times lay ahead for the industry.

World sawnwood prices tumbled last year as Asian demand fell, with the price of New Zealand roughsawn Radiata in Australia sliding from $A480 ($762) a cubic metre in the June quarter to $A460 a cubic metre in the September quarter.

ABARE expects Asian import demand for sawnwood to remain relatively weak for the next two years, with reduced demand from the major importing market of Japan holding down prices.

In Australia, competition for New Zealand sawnwood is likely to toughen as local production continues to increase and displaces imports.

Australian imports have fallen from 1.16 million cubic metres to 750,000 cubic metres as domestic production has risen to 3.6 million cubic metres.

Within five years this is expected to top four million cubic metres.

Similar problems are expected to increase for New Zealand producers of wood-based panels, already suffering market blows that pushed the price of their medium density fibreboard down from $A462 a cubic metre to $A385 between the March and September quarters of 1998.

Australian panel production rose by 13.5 per cent in 1997-98 and is projected to rise from about 1.6 million cubic metres this year to more than two million by 2004-05.

Mr Love said this competition had already been reflected in a fall in imports of medium density fibreboard in 1997-98.

However, Australian newsprint consumption rebounded to 718,000 tonnes in 1997-98 and, with local mills unable to meet the increase, imports from New Zealand's Kawerau mill rose.

Mr Love said that with both New Zealand and Australia rapidly expanding their softwood output from plantations, rising supplies of softwood products would spark growing competition between the two industries in the Australian market.

New Zealand had swung more exports to Australia and the United States during the Asian crisis, but even with a recovery in Asia those markets may not, in the long term, be able to absorb rising softwood production.

The New Zealand Finance Ministry now expected a swing to processed wood products and massive investment in new sawmills, remanufacturing plants, panelboard mills and pulp and paper plants.

Mr Love said New Zealand exporters were also turning long-term attention to India and China, the world's most populated, fastest-growing economies - both of which lack local timber resources.

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