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US overtakes Australia as top market for NZ timber
2002.12.23


US overtakes Australia as top market for NZ timber




The United States and Australia are expected to remain the largest lumber markets for New Zealand until 2006, according to an economic report released today.

But the US has replaced Australia as the main buyer both in terms of volume and value, a change that could have implications for timber exports.

The Situation and Outlook for New Zealand Agriculture and Forestry December report said the two were "quite different" markets. Australia was mainly a buyer of construction lumber, while the USA wanted mainly dried/dressed lumber.

The USA overtook Australia as New Zealand's main export market for lumber in the year to March, both in volume (31 per cent of total export volume) and value (23 per cent of total export value).

In the 12 months to March, exports of lumber to the USA jumped 47 per cent by value and 40 per cent by volume over the previous year, a big lift from the previous year's increases of 4 per cent by value and 2 per cent by volume.

Australia was the second largest lumber market at 22 per cent of total volume and 13 per cent of total value.

Future export volume growth for lumber would be driven by economic growth in target markets, with Australia growing at 3 per cent to 4 per cent a year and the US at 3 per cent a year, according to the report, compiled by Ministry of Agriculture and Forestry (MAF) economists, who said there also was a possibility of softer demand in Australian construction.

But they said there was potential for further volume growth for lumber exports to markets beyond Australia.

Japan should remain the third largest lumber market, and continued to have "great potential" despite its recent economic woes.

And efforts to move New Zealand radiata pine into the Chinese construction sector could pay big dividends.

Between 2001 and 2002, exports to China grew by 44 per cent, due largely to increased acceptance of radiata pine.

The annual average all-grades price for lumber exports remained almost the same in 2002 as the previous year at $502 per cubic metre, mainly because of competitive pressures and exchange rate changes.

A large volume of log exports in the year to March 2002 was due to increases in a few markets. Export volumes to South Korea jumped 44 per cent to 4.26 million cu m, while exports to China increased by a massive 128 per cent to 1.01 million cu m, both on the back of increased economic activity in these countries.

These two markets, plus Japan at 1.46 million cu m, (only slightly down on 2001) were by far the largest for New Zealand's logs, with the next largest being the Philippines on just 215,000 cu m.

The average all-grades log price fell sharply through the year ended March 2002, coming off an unusually high annual average price in 2001, which was partly exchange-rate fuelled and partly a correction after significant falls during the "Asian crisis".

Growth in log exports for beyond next year will be based on economic growth in New Zealand's main markets, particularly South Korea at more than 5 per cent a year, and on the expanding Chinese market.

Also, Japanese commentators say log inventories there are forecast to tighten by the end of 2002-03, possibly leading to stock rebuilding in 2002-03, and the potential for greater expansion in the Indian market remained strong.

But nominal prices for log exports are expected to remain flat for 2002-03, as more volume is exported, with price rises probably forgone so that volume can be promoted.

Expanding markets are forecast to provide opportunities for price increases in 2003-04 and beyond, with prices in United States dollars expected to rise around 5 per cent through 2004-2005, exchange rate movements will depress the actual prices paid in New Zealand dollars.

Source: NZPA

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