Log prices stay on rise

Continued in-market log price rises this month are leading to suggestions the increases could carry on into May.
The April Agrifax Forestry Market Report shows the current CFR rate for a KS log at US$151 ($188.31) per JAS cubic metre and for a KI log is US$148, bucking the usual seasonal decline in the Chinese and Korean markets.
Analysts suggest the normal drop-off is due to warmer weather in those markets causing a slowdown in construction and to peak supplies from markets such as Russia.
China is now seen as a "mega-market" and the central focus for logging exporters around the world. But the current unseasonal price rises are causing many New Zealand exporters to express caution, while others are predicting growth will continue into the third quarter.
Demand for import logs has also been pushed up by Chinese Government moves to protect the natural environment and lower carbon emissions.
Logging has been banned for 10 years in the northeastern Heilongjiang province - home to 430,000sq km of forest.
Supply from this region is expected to drop by more than 3 million cubic metres this year, but it will boost forest reserves by 400 million cu m over 10 years.
New Zealand's contribution to Chinese log imports grew by 1.45 million cu m in the past year.
Demand is also growing in India, although shipping costs and complicated logistics mean this is seen as a comparatively difficult option for exporters.
The report says Indian manufacturers have a "growing appreciation" for New Zealand radiata as their experience working with the product builds.
Other markets are remaining relatively steady, although there is talk of an impending boom in log demand in Japan and other Asian markets as rebuilding begins in Japan. This is expected to put pressure on log markets in the near to medium term and traditional suppliers are likely to be building stocks in preparation for this boost in demand.
The greatest lifts are predicted for processed lumber and plywood and their raw materials as manufacturers expect the rise in Japanese demand.
Overall, New Zealand log exports totalled 2.84 million cu m in the three months to February - 32 per cent up on the same period a year earlier. China made up 70 per cent of this increase and India accounted for the remaining 30 per cent.
Domestically, log prices experienced their largest quarterly increase in "many years" - certainly since Agrifax records began in 1993.
This rise was expected as export prices had been rising for months, while domestic prices remained relatively unchanged for six months.
Pruned log prices have been steady in the South Island and rose 7 per cent in the North Island. But the greatest rise was in unpruned structural and utility grades, which rose $25 a tonne.