Growing optimism as log prices lift

HAPPIER NEW YEAR: The forestry industry in Tairawhiti and elsewhere in New Zealand has turned the corner into the New Year in a better place than it was in in November, thanks to a 20 percent lift in log prices. File picture

The forestry industry here and elsewhere round the country has started the New Year with a bit more optimism than it finished 2021, thanks to a small lift in log prices.

In November last year the industry was said to be in “crisis” mode due to the decline in the value of export logs, particularly to China.

Global prices had plummeted and it was reported that forestry crews in this region faced a “lean” Christmas and early New Year until prices picked up.

Eastland Wood Council board member and the manager of Ngāti Porou Forests Daniel Williams yesterday said prices had risen by about 20 percent on November.

“We'll have a clearer picture of where prices are going in the next few days but at this stage, while prices are still low compared to what they were earlier last year, there has been a small but definite lift.

“While prices are still not yet where they normally would be at this time of year, the situation has improved on the end of last year.”

“The log trade into China always tends to ease off at this time of year due to a major celebration in China.

“The Chinese celebrate their New Year at the start of February. That effects the demand for logs into China.”

Eastland Wood Council general manager Philip Hope said forestry remained a strong industry and would continue to be a key driver of the regional economy.

“The down-time between December 27 and January 10 represents a natural break in the forestry industry and shipping of logs.

“Currently there are 60,000 tonnes of logs stacked at the wharf and a further 13,000 tonnes at Dunstan Road.

“These volumes will reduce as the flow of wood across the port recommences this weekend,” Mr Hope said.

“Currently there are four vessels on the schedule, although the port expects six-to-seven ships for January 2022.”

Six ships visited in January last year and exported around 170,000 tonnes.

“We expect to export around the same this year.”

In December, the port handled 160,000 tonnes of logs across six ships compared to 260,000 tonnes across 11 ships during December 2020.

“Accordingly, export numbers are down on the previous year,” Mr Hope said.

“December 2021 year to date is 2.128 million tonnes exported versus December 2020 of 2.203 million tonnes exported.

“While cart-in of logs to the port resumes on Monday, most of the forestry companies, contractors and crews have taken a longer break during the festive season.”

“Everyone in the industry has needed this time to rest and have more time with their whānau, he said.

“The majority of contractors will not resume harvesting operations until Monday January 17,” he said.

“We expect cart-in volumes to be somewhere between 8000-10,000 tonnes a day until the end of January.”

Mr Hope said the past year had delivered many challenges and reminded them all about resilience planning, the importance of health and wellbeing and the value of collaboration.

“Our biggest priority remains the safety and wellbeing of our workforce and their families.

“Like any commodity market, export prices fluctuate between peaks and valleys. Subsequent to EWC's report late last year, log pricing has generally remained flat.”

The drop in sales price in China was countered by a fall in freight costs and the New Zealand dollar weakening against the US dollar, he said.

“Log demand usually reduces heading into the Chinese New Year at the start of February, then increases rapidly until construction activity is at full production until the hot sticky weather arrives in China in June and July.

“We acknowledge the impact on some forestry companies and contractors is greater than others, and there have been a range of measures provided to support where possible.

“Together we will get through this. The trees will have grown in value and harvesting operations will be full steam ahead,” Mr Hope said.

The logger African Egret went back to sea yesterday due to the southerly swell but will return to load cargo over the weekend.

According to the current port schedule, she will be followed by the Ernst Oldendorff, with the Iris Harmony due on January 14 and the Key West at the end of the month.