Local timber market sluggish, exports relatively stable

China trade remains stable-to-firm, but local timber markets remain slow outside of parts of the South Island.

It’s been a month of relative stability throughout the wider forestry industry. The main piece of good news for harvesters has been the minor increase in CFR prices in China. 

While any movement in this section of the market is expected to be small in the short term, due to seasonally weaker construction and an increase in port-level inventories, the longer-term outlook is relatively positive. 

The above has been helped by the expectation that the United States will soon extend the 90-day truce on additional tariffs while they continue to negotiate with China on a more permanent arrangement.

A steady, moderate level of log sales are continuing to be made into India, where the market has been similar to China after accounting for extra shipping costs. A second round of NZ-India FTA talks ended last week, with another round scheduled for September. 

Locally, the main talking point has been the consistently wet conditions through the first three weeks of the month. 

The Nelson/Tasman region was hit especially hard, with an estimated 4000 ha of forest affected by a windthrow event. 

Although this is of significant scale, supplies from the salvage effort aren’t expected to have a large impact on the market as harvesting will be slowed by the terrain (usually steep) and the limited capacity of the local port. 

Otherwise, local timber markets have remained sluggish outside of parts of the South Island (i.e. Otago), where construction is robust. 

The Government has just released a document listing numerous overseas building products that will now be approved for use within New Zealand, based on other overseas government  certification criteria. It is expected that this will reduce the cost of housing construction. 

House construction costs have lifted substantially in New Zealand since the pandemic, quoted as up 25-46% since Q1 2020 for a standard single-story home, depending on the source. 

The secondary carbon market has been on a slow downward trend this month, following the brief lift after last month’s quarterly carbon auction.

Spot prices at the time of writing were $56/NZU. The public consultation period for Emissions Trading Scheme (ETS) settings closed late last month, and the final decisions will be announced in late September.

Source: Farmer's Weekly