Radiata pine log prices firm as supply and demand risks loom

Summary

Radiata pine log prices in New Zealand have firmed, with JAS grade A short logs holding above NZ$120 a tonne. Sawmill closures and reduced processing capacity are tightening supply,

while demand remains heavily tied to China, which takes 55 percent of forestry exports. Analysts expect prices to stay firm through August.

Commentary

Radiata pine log prices have recovered to above NZ$120 a tonne, with the autumn pullback the mildest in four years. On the supply side, sawmill closures, the loss of 570 jobs, and processing bottlenecks for wind-damaged logs point to a continuing decline in total harvest volumes. Demand, however, remains highly concentrated in China, which takes 55 percent of forestry exports, while weak domestic property markets cap the upside.

More attractive pricing from India is encouraging exporters to diversify. The merger of PF Olsen and Forest360 to form Stand Forestry will increase market concentration, potentially squeezing the bargaining power of smaller forest owners. For NZ SMEs, the advice is to avoid blindly chasing highs, instead tracking China port destocking and panel mill operating rates, while securing alternative supply from Australia and Chile to hedge risks.

They should also monitor the impact of the New Zealand dollar exchange rate and shipping volatility on export margins.

Keywords: radiata pine logs, market recovery, JAS price, supply contraction, China market, export diversification, Stand Forestry, market risk

Source: Shandong Provincial Department of Commerce