NZ roundwood log prices jump to a record on demand from construction, horticulture industries

The average price for roundwood logs rose to $90 a tonne in February, up $5 from January's average price.

Strong domestic building activity combined with buoyant horticulture and viticulture industries has pushed up the price of roundwood logs to a record.

The average price for roundwood logs rose to $90 a tonne in February, up $5 from January's average price and at the highest level since AgriHQ began collecting the data in early 2002.

New Zealand local councils approved consents for 29,970 new dwellings last year, up 10 per cent from the previous year, as record net migration and low interest rates spur demand for additional housing. A booming horticulture industry is also spurring investment activity in that sector, helping stoke demand for roundwood.

"The roundwood sector is currently in a period where interest is at unprecedented levels," AgriHQ analyst Reece Brick said in his monthly forestry market report. "Demand for poles has been especially strong, for the likes of foundations and retaining walls.

"Multiple strands of the horticulture and viticulture industries have also maintained their presence in the roundwood markets as well. The sheer volume of activity has meant some mills have battled to fill orders in recent months."

Export prices for New Zealand logs lifted for every grade covered by AgriHQ's survey of exporters, forest owners and saw millers.

The average wharf gate price for New Zealand unpruned A-grade logs advanced to $128 a tonne, the highest level since AgriHQ records began in late 2008, while prices for various K-grades haven't been this high since the early-mid 1990s. The $166 a tonne recorded for export pruned logs was firmer than any of the previous six months, although lower than the first half of 2016, Brick said.

Shipping rates to New Zealand's key log export destinations slipped. The rate to China, New Zealand's largest export market, declined 1 per cent, while South Korea and India both dropped 3 per cent.

The latest data showed New Zealand log exports increased 9 per cent to 15,913,512 cubic metres last year compared with the year earlier. China took 69 per cent of the country's logs while South Korea took 17 per cent.

Forest products are New Zealand's third-largest commodity export group behind dairy and meat products.