New Zealand log export prices drop sharply

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The export log prices in New Zealand decrease in June on stronger currency and higher shipping costs. Thus, the prices slid to a five-month low in June as returns were hurt by a stronger local currency and an increase in shipping costs.

As reported by WoodWeek, the average wharf gate price for New Zealand A-grade logs dropped to $116 in June, from $120 a tonne in May, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. This represents the lowest level since January's $115 a tonne.

The shipping costs to China, the country's largest log export market, increased this month to US$16.20/JAS, from US$14.70/JAS last month, due to an increase in oil prices and a decline in ship visits as demand waned for fertiliser and palm kernel.

The in-market price of A-grade logs in China rose to US$120/JAS from US$113/JAS last month even as inventory levels on Chinese ports increased to 3.8 million cubic metres from 3.6 million cubic metres last month. At the moment, there are 50,000 cubic metres per day currently being taken from ports although AgriHQ expects demand to decline in coming months.

"Cracks are slowly emerging in the Chinese log market, with the impressive market prices that have been present over the past few months likely to subside as we progress towards the middle months of the year," AgriHQ analysts Reece Brick and Shaye Lee said in their report.

On the New Zealand domestic market, the demand continued to decrease the prices for both pruned and structural logs. In the pruned market, P1 logs reached $184 a tonne from $181 a tonne in May, with mills absorbing the higher prices as end users of products made using pruned logs resisted the increase.

In the structural market, S1 logs prices remained unchanged at $114 a tonne.

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