New Zealand Log Export Volume and Prices Continue to Decline

New Zealand’s forestry industry continues deal with significant declines in the demand for export logs. China remains New Zealand’s largest customer for logs. Chinese construction companies, several with copious amounts of debt, are teetering on failure, without government intervention. As a result, the expectation for construction activity in China in 2022, is approximately 20% or more below 2021 levels.

Currently the softwood inventory in China is estimated as being above 5 million cubic meters, and experts say it will take a while to get the inventory back to levels that support significant increases in purchases. Another major headwind for NZ log exports has been the massive increase in shipping costs globally. Much of this increase was based around demurrage from vessels sitting at anchor waiting for a berth in North America.

The Russian log export ban is supposed to take effect early in January and this has the potential of providing some increased demand for NZ logs to China. Whether the increase will be enough to offset the record drop in export returns between July and November and the resulting decrease in logging of around 30% nationwide is difficult to predict.

In the meantime, many harvest crews have been placed on production quotas and some of the smaller woodlot-based crews struggling to find their next job.