The Commerce Commission wants a "please explain" after timber giant Carter Holt Harvey abruptly cut supplies to a number of building retail chains, prompting concerns that costs will rise and construction could slow.
The company has stopped selling structural timber to ITM and Mitre 10 but continues to supply to some of the bigger operators.
The Commission says it was aware of supply issues in the building industry, however Carter Holt had not specifically advised the commission of its intention to cease supply to some customers. And it says it will speak to Carter Holt to understand what is happening and the potential ongoing implications for competition.
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Meanwhile, the supply squeeze will end up hurting smaller building operators according to one industry insider.
Marty Verry is chief executive of Red Stag - a privately owned independent timber company based in Rotorua.
He says if the Kawerau mill gets up to speed, the supply should not be a major problem.
Carter Holt Harvey has released a statement saying there have been some short-term industry-wide supply issues.
It goes on to say it's continuing to meet its contractual obligations and the curtailment of supply relates to around 10 per cent of the company's structural timber volume.
It says there is no issue related to log supply, and it's not exporting structural timber.