Rising Asian demand to boost New Zealand’s forestry sector

In February 6, 2017

New Zealand’s forestry sector will encounter an even larger growth in the market due to the ongoing demand from Asia. November, the export log prices in the country rose for a third straight month, also due to the low shipping rates and demand from China, the country’s largest export market.

As reported by NZ Herald, following the AgriHQ survey of exporters, forest owners and sawmillers, the forestry industry was continuing to enjoy a spell which has regularly been described as the strongest in at least 20 years.

Also, the information has been sustained by Marcus Musson, a director of Forest Owners Marketing Service Ltd (FOMS), a company that provides harvesting and marketing services to private forest owners across the North Island.

Musson added that the returns for owners sector was the most stable for the market since 2013. Following the Chinese New Year celebrations in February, there has been a sharp price correction and the when log inventory levels in China reached levels exceeding 4 million m3.

According to NZ Herald, usually there was something like 50,000 cubic metres of logs and lumber landing in China each day during the holiday period, “a time which basically has zero demand for between two and four weeks,” Musson explained.

“This is also coupled with a reduction in Chinese domestic harvest due to continued issues with erosion and water quality as a result of deforestation across the country. The Chinese domestic harvest supplies about 60 per cent of the 66 million cubic metres used in China annually,” Mr Musson said.

Yet, this year fewer logs and less lumber entered the Chinese ports in the holiday period, so the usual over-supply wasn’t the same. Also the prices were supported by the continued low shipping rates from the last 12 months and the foreign exchange rate that was in favor of New Zealand.

Rising Asian demand to boost New Zealand's forestry sector Source: NZH/AgriHQ/Fordaq.  Available from <http://www.ihb.de/wood/news/New_Zealand_forestry_sector_Asia_50517.html> [January 26, 2017]

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