He said historically there was a sharp price correction following Chinese New Year celebrations in February when log inventory levels in China reached levels exceeding 4 million cubic metres.
Usually there was something like 50,000 cubic metres of logs and lumber landing in China each day during the holiday period, "a time which basically has zero demand for between two and four weeks".
But this year there were fewer logs and less lumber entering Chinese ports during the holiday period and, as a result, there wasn't the usual over-supply.
Prices had also been bolstered by continued low shipping rates over the past 12 months and a foreign exchange rate that favoured New Zealand.
"This is also coupled with a reduction in Chinese domestic harvest due to continued issues with erosion and water quality as a result of deforestation across the country. The Chinese domestic harvest supplies about 60 per cent of the 66 million cubic metres used in China annually," Mr Musson said.
"We expect some further increases in cost of freight rates in December in response to the recent earthquake and the damage to the Wellington port. The earthquake was front-page news in China and buyers are worried about supply stability from the region," he said.
Prices had been kicked on by a buoyant construction market with most sawmills experiencing low log inventories.
"This isn't so much an issue of a supply reduction to these mills but rather an increase in their production in response to demand for lumber."
Mr Musson expected the forest sector to continue to provide forest owners with healthy returns.
He said it was a view supported by the number of Chinese buyers looking for forest investments here.
"Many of these buyers are looking for a stable fibre source which has a very wide range of uses from packaging to furniture. Our radiata pine is well received in China due to its versatility and consistency of quality and supply," he said.
Forest products are New Zealand's third-largest commodity export group behind dairy and meat.
