Export log prices hold steady in July amid uncertainty about Chinese outlook
New Zealand export log prices were unchanged this month amid uncertainty about the outlook for China's economy.
The average wharf gate price for New Zealand A-grade logs held at $86 a tonne in July from June, according to AgriHQ's monthly survey of exporters, forest owners and sawmillers. The AgriHQ Log Price Indicator, which measures average log prices weighted by grade, fell to 89.17 from 89.38 last month, led by declines in domestic log prices.
Log exporters have been optimistic that prices would pick up after falling to a three-year low of $83 a tonne in May, as Chinese sawmillers started to make inroads into log inventories at the country's ports. Still, the outlook for demand in China, the country's largest market, remains uncertain, AgriHQ said.
"Market participants are expecting some price increases through August and September, however they are not overly confident in the recovery," said AgriHQ analyst Emma Dent. "Slower demand from China over their summer months will help reduce inventories on Chinese ports which still remain at high levels."
Demand from China is typically lower in the third quarter heading into the country's summer season.
Log inventories at Chinese ports currently sit at about 3.8 million tonnes, down from more than 4 million tonnes earlier this year, but higher than a normal level of about 2 million tonnes.
Prices for New Zealand domestic logs were mixed. Structural log prices edged lower to $106 a tonne from $107 a tonne last month. While demand for structural wood remained strong due to a housing shortage, building activity slows during winter months and there are large volumes of lumber in the market, Dent said.
Meanwhile, pruned log prices increased to $163 a tonne from $161 a tonne last month amid tight supplies in the Central North Island, which saw North Island logs fetch a premium of $165 a tonne compared to the South Island price of $151 a tonne.
"Most market participants are expecting that demand for pruned logs will continue to outweigh supply which will put upwards pressure on prices," Dent said.
Logs, wood and wood articles are New Zealand's third-largest commodity export, behind dairy and meat. The value of wood exports fell 16 percent to $3.45 billion in the year through May, according to Statistics New Zealand. The latest trade figures for June will be published next Friday.