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New Zealand's log exports feel China construction woes
[Jun 23, 2025]



The six months from October to March was one of the longest spells of market stability this decade. Prices at the New Zealand wharfgate (that is, what exporters are paying harvesters) held at or a little above the five-year average through these months, which was ideal as this timed with the seasonal increase in log harvesting as weather conditions improved.

A few different factors all worked in New Zealand log harvesters’ favour during this time, including a weakening exchange rate, softening shipping costs, further growth in sales into India, and a period of stability around China’s economy and construction sector.

However, if it’s going to get rocky, it’s usually in the months immediately following Chinese New Year, when buyers there reassess their requirements against the volume of extra logs that stacked up on ports while they were on holiday. And this dynamic was the key driver behind this latest price drop.

Average prices at the New Zealand wharfgate have weakened by around $20/JASm3 since March to a national average of US$113/JASm3 for A-grade logs last month. This month’s prices are yet to be fully collated but appear to be about the same.

We shipped 3.7 million cubic metres of softwood logs to China through March and April, the highest recorded for these months and up from 3.2 million m3 in the same months last year.

The volume of softwood logs on port in China rose to around 4.0 million m3 after the Chinese New Year, and the fact that more logs were on the way meant buyers there could negotiate prices down.

These on-port volumes weren’t overly large compared to other times in the past 10 years or so. However, log usage rates in China aren’t what they used to be since the collapse of various giant property development companies, which started from the second half of 2021, a situation that is yet to fully resolve itself.

Official construction data paints this picture clearly – as of April, the floor area of new Chinese houses that began construction this year was the lowest since 2004 at 18 million square metres, down from 40-59 million m2 through the same period in 2016-2022.

The United States-China tariff war added further uncertainty to the market and the wider Chinese economy at the start of March too. Over the past five years, the US has been the largest single market for Chinese wood products with an annual market share of 18-22% by value.

The good news is we appear to be at the bottom of the market, at least for the short term. The 90-day partial “truce” between the US and China from mid-May has eased tensions, while log supplies out of New Zealand are tightening due to the weather and the weaker pricing.

Log usage rates in China have been somewhat positive too, to the point where port-level log inventories have declined this month. The exchange rates and shipping costs have mostly stabilised too.

India is slowly re-emerging as an alternative market for New Zealand logs, though they’ve only exceeded a 5% market share by volume once in the past 12 months.

This trade has been growing in unsteady steps since last year, following the relaxation of rules in India, which previously required logs to be fumigated with methyl bromide before departure. This was outlawed in New Zealand in mid-2021.

Like China, the oversupply of logs has been holding back this market, mainly due to steady-to-strong supply from Australia and South America. It is hoped that free trade talks will expand market opportunities here, given India applies a 5% tariff to all New Zealand log imports, which can be enough to tip the scales as to whether this trade is viable considering the cost to ship to India is more than it is to ship to China/South Korea.
 
Source: agrihq.co.nz



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