New Zealand Log Prices - June 2011

Prices in the market for New Zealand radiata logs have moved downwards this month. Inventory levels in China have swelled. Record numbers of logs have entered Chinese ports in the past three to four months and more are expected to arrive as Russia and North America approach peak production. New Zealand has also exported record volumes into the Chinese market in the first part of this year.

In-market (CFR) log prices in China have slipped more than US$10/JASm3 as a result. A snapshot for June has the price of a KS log at US$144/JASm3 and a KI log at US$140/JASm3. These prices are expected to continue falling through the New Zealand winter. But the last quarter of 2011 should see a return to improving prices Activity in China will again lift towards the end of the year coinciding with supply from Russia and North America undergoing seasonal decline.

There will also be a clearer picture of what effect rebuilding activity in Japan is likely to have on demand by this time. Demand from India continues to grow and Korean demand remains steady.

The Agrifax Log Price Index, which measures returns from the whole forest, has recorded its second monthly fall in June. The index fell NZ$4/t back towards NZ$90/t. The unpruned component of the index recorded large falls. The pruned and pulp components remained mostly unchanged.

North Island