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 – residential consents were up 10% on last year in January – 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