House building in Auckland and Christchurch is lifting the price of logs as demand exceeds supply.
New Zealand export log prices advanced this month as a decline in the local currency made the country's shipments more competitive, offsetting a lift in shipping costs.
The average wharf gate price for New Zealand A-grade logs edged up to $120 a tonne this month, from $119 a tonne last
month, AgriHQ's monthly survey of exporters, forest owners and saw millers showed.
The in-market price of A-grade logs in China, New Zealand's largest market, advanced to US$113/JAS from US$111/JAS last month as inventory levels on Chinese ports remain moderate, following a relatively low build-up of stock on ports during the Chinese New Year holiday period. Log inventories on Chinese ports are about 3.6 million cubic metres, with a consistent offtake of 50,000 to 55,000 cubic metres a day, although volumes are coming at a faster rate, suggesting inventories are building, AgriHQ said.
"The outlook for the market varies between NZ market participants," AgriHQ analysts Reece Brick and Shaye Lee said in their report. "Some believe the market will maintain its current trend in the coming months, given the recent stability of the market. Others are more pessimistic, believing current returns are too high to be maintained in the long run."
Chinese log imports lifted 2 per cent to 6.1 million tonnes in the first quarter, with New Zealand and Russia each accounting for about a third of the trade. March imports lifted 53 per cent from February, signalling recovery of market activity after the Chinese New Year, and trade is expected to lift in the second quarter, in line with the seasonal trend, AgriHQ said.
