China’s Log Market Exceeds Expectations, No Hope for Price Hikes

Summary

In the first five months of 2024, New Zealand's log exports to China reached 7.98 million cubic metres, up 18% year-on-year, with a trade value of US$999 million, up 10%. Market demand exceeded expectations, with modest price recovery for some premium grades, but exporters have not significantly adjusted prices, believing the current A-grade CFR price of around US$120 per cubic metre is stable and unlikely to fluctuate sharply in the short term. Domestic plantation production enthusiasm in New Zealand is subdued, leaving loggers and trucks idle.

Eastern coastal traders are active, boosting the market, but overall Chinese economic activity remains sluggish, with construction and manufacturing consumption at reasonable levels. Exporters expect that if performance remains good, the price fundamentals in the third quarter will stay stable.

Commentary

New Zealand log exports to China have risen in both volume and value, but exporters remain cautious about price increases, reflecting a market supply-demand tug-of-war. For the Chinese market, the involvement of eastern coastal traders has improved liquidity, but end-user demand is constrained by weak construction and manufacturing sectors, limiting upside price potential. For New Zealand SME owners, particularly in the timber industry, this means stable income from higher export volumes, but profit improvement depends on cost control, such as lower freight rates which could be a positive.

Meanwhile, domestic sawmills are operating well, offering opportunities for related service providers. However, the pace of China's economic recovery is uncertain; if construction activity remains subdued, log demand may slow. Businesses should monitor third-quarter data and flexibly adjust inventory and pricing strategies to avoid over-reliance on a single market.

Keywords: New Zealand, logs, exports, China, price, demand, timber, trade, market

Source: Weibo