According to feedback from New Zealand timber merchants, the trend of slight increase in New Zealand log export prices has been maintained from the fourth quarter of 2023 to January 2024.
However, in the view of New Zealand timber traders, if there had not been the impact of the Red Sea crisis, New Zealand log exports might have achieved better prices. But now, the ship needs to go around Africa, adding about 18 days to the voyage.
At the same time, the conflict in the Gaza Strip and the ongoing conflict between Russia and Ukraine have put upward pressure on international oil prices, resulting in an increase in log export charter costs of US$3-4 per cubic meter.
Not only that, according to analysis by industry insiders, in addition to fluctuations in New Zealand log export prices being affected by international shipping rates and international crude oil prices, the supply and demand situation in China's domestic timber market is also an important factor.
It is understood that in the past five years, New Zealand's average annual log output has remained between 30 million and 34 million cubic meters, 65% to 70% of the products are exported, and 30% are produced by New Zealand sawmills, plywood, and medium-density fiberboard factories. Domestic processing plants digest it. Among the wood products processed in New Zealand, 40% is exported, and the rest is used for domestic consumption in New Zealand.
Among New Zealand's log exports, my country imports nearly 90% of its total exports, South Korea accounts for 8%, and the remaining shares are equally divided between Japan, India, Vietnam and other countries. This shows that New Zealand is extremely dependent on the Chinese market. In this case, changes in demand in the Chinese market have a significant impact on New Zealand log export prices.
Over the past decade, the cost-plus-freight (CFR) price for New Zealand's Grade A logs exported to China has been between US$90 and US$190, while in 2023 this price will fluctuate to between US$105 and US$140.
It is worth noting that from October 2023 to January 2024, the CFR price of New Zealand logs to my country has quietly climbed, from US$115/cubic to the current US$128.
Although New Zealand log export prices fluctuate, in the view of New Zealand timber traders, the current level may have reached a mid-term peak. Although this price increase trend is difficult to maintain in the current international economic situation, the obvious changes in order volume over the past four months indicate that , Chinese market demand remains strong, which provides strong support for New Zealand log exports.