China is New Zealand’s largest overseas market for logs. Currently, China accounts for 70-90% of all log exports. Earlier this year, log prices were at near record high levels in New Zealand. In November, the price of logs had sunk to lows not seen since late 2015. The lower prices have resulted in a significantly reduced number of logs heading to ports, with many logging crews either being told to work at reduced capacity or not to work at all.
Phil Taylor, the Forest Owners Association president is calling the sudden collapse in log prices a “perfect storm.” Taylor went onto explain the dilemma saying that reduced processing capacity at sawmills in China and significant increases in shipping costs are the root of the problem.
“International shipping at the moment has been significantly disrupted… basically everything is being impacted,” Taylor said. He added that the situation was very fluid, but it anticipated the low prices would carry through into the first quarter of next year.
Taylor’s biggest concern is the impact lower rates of harvesting had on logging and trucking contractors. “Obviously they need to keep busy; they’ve got a lot of money invested in capital,” he said.
Forest Industry Contractors Association President Prue Younger sees a similar problem, noting that a recent survey of members found only about 35% were operating business as usual.
FEA compiles the Wood Markets News from various 3rd party sources to provide readers with the latest news impacting forest product markets. Opinions or views expressed in these articles do not necessarily represent those of FEA.
Forestry operators hope for recovery after 'perfect storm' hits log prices