Log Export Volumes Fall as Fuel Costs, Geopolitical Conflict Bite

Summary

Operating data from New Zealand's two core ports show national log export volumes fell noticeably year-on-year in the year to September, weighed down by soaring fuel costs and ongoing geopolitical conflict. Napier Port exported 2.622 million tonnes of logs for the year, down 2.8 percent year-on-year, with only the final quarter showing a small 4.4 percent recovery. Port chief executive Todd Dawson said total bulk cargo throughput declined this year due to lower log exports and reduced cement and petroleum product imports.

Container channels performed relatively better, with wood and paper product shipments driving a 3.3 percent year-on-year increase in dry container exports for the year, partly offset by a slight decline in pulp exports, leaving total container throughput broadly flat on the prior year. Tauranga, New Zealand's largest port, reported log exports of 5.8 million tonnes in the year to June, down 8.1 percent year-on-year. The port said the Iran conflict pushed up fuel costs, prompting many exporters to voluntarily scale back harvesting in the second half of the financial year.

Scott Downs, head of a New Zealand forestry body, said a stronger renminbi in August significantly boosted the purchasing power of Chinese log buyers, with 1.618 million cubic metres of New Zealand logs arriving at Chinese ports in August 2026, up 23.1 percent year-on-year and about 300,000 cubic metres higher than the same period last year. He said, however, that over the longer term, as China's domestic plantation timber output is gradually released, demand for imported softwood logs may gradually narrow. Separately, New Zealand's domestic sawn timber market saw its strongest winter demand in years, with new residential building consents rising sharply year-on-year.

In September most domestic processors cancelled a previously imposed 2 percent fuel surcharge on sawn timber, while ex-factory sawn timber prices had originally been scheduled to rise by an average of 5 percent over the same period. Downs said geopolitical tensions in the Middle East and uncertainty over fuel and other input costs continue to keep sawmills cautious.

Commentary

Behind the decline in New Zealand's log exports is a sustained squeeze on the forestry supply chain from fuel costs and geopolitical conflict. Data from Napier and Tauranga ports show exporters voluntarily scaling back harvesting and bulk cargo throughput falling, yet containerised wood exports grew 3.3 percent against the trend, reflecting a shift by some firms toward higher-value processed products to offset logistics costs. China, New Zealand's largest log buyer, saw purchases surge 23.1 percent in August as the renminbi strengthened, but over the longer term China's plantation output will gradually substitute for imported softwood, and New Zealand's small and medium forestry firms need to accelerate their extension into downstream products such as sawn timber and engineered wood.

Although the domestic sawn timber market is strong on rising residential consents, with sawmills cancelling the fuel surcharge and planning price increases, cost uncertainty from the Middle East situation continues to weigh on industry confidence. For NZ SMEs, the short-term opportunity is to capture the Chinese purchasing window, while the medium-term priority should be diversifying markets and deepening processing to avoid reliance on single-product log exports.

Keywords: New Zealand log exports, Napier Port, Tauranga Port, fuel costs, China plantation forests, softwood log demand, sawn timber market, Scott Downs

Source: Chinatimber