Buoyant New Zealand activity has pushed up local log prices to new record highs.
The average price for roundwood logs used in the horticulture sector rose to $92 a tonne in March, up $2 from February's average price and at the highest level since AgriHQ began collecting the data in early 2002, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. Structural log prices also increased, with S3 logs hitting $114 a tonne, the highest since AgriHQ began collecting the data in early 1995, while S1 logs rose to $122 a tonne, the highest since mid-1994.
Record high net migration and low interest rates are putting pressure on the nation's housing market, driving up prices and stoking construction activity. A booming horticulture industry is also spurring investment activity in that sector, helping drive demand for roundwood.
"The NZ domestic log market has maintained its incredible strength in recent weeks," AgriHQ analyst Reece Brick said in his report. "Orders were flowing into sawmills at a constant but rapid rate, mainly underpinned by the ever present housing construction sector, especially around Auckland. This procurement competition between mills meant the AgriHQ price for the majority of key domestic log grades lifted."
Brick said demand remained firm in the pulp, pruned and roundwood markets.