The first Government carbon auction for the year was a
non-event as not a single unit was sold.
March started off on a stable footing but US president Donald
Trump¡¯s 20% additional tariff on Chinese goods has affected
business confidence.
A bit of downward pressure was bound to be felt from the Chinese
log market eventually, and there are early signs of that coming
into play as we¡¯ve moved to the back end of the month March.
March started off on a stable footing but US president Donald
Trump¡¯s 20% additional tariff on Chinese goods has affected
business confidence there, leading some buyers to take a more
cautious approach to volumes purchased. The lift in port-level
log inventories since Christmas is also having some impact.
How much of a drop we¡¯ll feel is unknown, but if we set aside
the whole US situation, market fundamentals aren¡¯t too
dissimilar to the back third of last year. Unfortunately, this
has timed with the NZD:USD lifting two cents since the start of
March, and shipping rates have firmed as the month¡¯s progressed
too.
Locally, it¡¯s still a bit of a waiting game. There¡¯s the odd
peep that things might be starting to climb off the floor ¨C
residential consents were up 10% on last year in January ¨C but
in reality the construction sector has a long way to go before
it¡¯s near where it used to be. There¡¯s been a mild oversupply of
logs in some regions where woodlots have a larger prevalence,
more so around pruned logs, but as a whole the market seems to
be absorbing what¡¯s coming out without too much fuss.
There¡¯s a bit of optimism that a free trade deal can be struck
between New Zealand and India that would remove tariffs on logs,
further opening this market up to be a more viable alternative
to China.
Another company has announced plans to open a plant in the
Central North Island which would produce torrefied wood pellets
for use as biofuel, mainly as a substitute for coal.
The first Government carbon auction for the year was a non-event
as not a single unit was sold. The secondary market initially
weakened to near NZ$60/NZU but fell another $5/NZU last week.
Source:
farmersweekly.co.nz
