September was another month with more of the same for New Zealand log markets and the forestry sector in general.

The big news was the announcement that both Winstone Pulp International mills would close, despite some last-minute attempts at keeping the plants operating. The Oji Fibre Solutions Penrose paper recycling plant suffered the same fate.

In both instances, high electricity prices were cited as the key reason, with high labour and transport costs a factor too.

Otherwise, the state of NZ’s domestic timber market was widely unchanged. Structural markets continue to feel the pinch of low housing consents (which aren’t improving); there’s a slight oversupply of pruned logs in the North Island; sales of posts and poles are yet to show and spring lift; and reduced pulp mill capacity is forcing more pulp logs onto export markets.

Everyone is hoping for more cuts to interest rates to help spark more life into the economy and housing market, but any changes will likely be slow to materialise.

China has come out of its seasonal lull with some relative optimism as daily log usage rates from ports lifted to around 60,00065,000 m3 per day this month.

No one’s expecting a significant change in in-market log values going forward given this will likely be balanced out by an increase in supply, especially as New Zealand moves towards summer. Not to mention the Chinese property development sector remains knocked to the ground, with another round of negative construction and house price data published this month.

Although not a massive market, NZ has found a sustainable spot in the Indian log market with a few vessels per month, taking the peak out of volumes into the otherwise soft Chinese market. Sales into India, by and large, have returned better money, though the difference isn’t massive. Wharf Gate log prices edged back a few more dollars this month, but steady in-market pricing plus a mild decline in shipping rates both have traders optimistic that we may see some more money available through October and potentially November too.

The third quarterly carbon auction at the start of the month didn’t register a single bid, which was widely expected given the secondary market has traded under the reserve threshold for much of the year. The secondary market has mainly stabilised around $62/NZU in the weeks since.

Source: farmersweekly.co.nz