June is historically the poorest performing month in the New Zealand export log market and this June is no exception, with A grade generally in the mid $90’s/m3 across most NZ exporters.
There’s nothing new in this level at the bottom of the price cycle, but this year the difference is the increase in costs due to fuel. If you deduct the increase in logging, cartage and roading costs over the past 12 months from the current export prices, you’re looking at a further reduction in return of $12/tonne. This gives an equivalent A grade export price in the early $80’s/m3 which is the lowest since November 2015 (when costs where probably $20/tonne lower).
It is very likely that NZ supply to China will drop around 40% over the next few months as many forests either shut down or drop production significantly. The fallout of this drop is likely to be felt with NZ logging and cartage contractors who are already feeling the pressures of wage and general cost increases.
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