26 Jan 2015

Analyst predicts end to log price lift

1:48 pm on 26 January 2015

There has been a further improvement in export log prices after they took a tumble last year - but it is not due to any lift in demand or price in the main market, China.

A pile of Pinus radiata logs waits for export at the port in Lyttelton.

A pile of Pinus radiata logs waits for export at the port in Lyttelton. Photo: 123rf

Agri HQ forestry analyst Ivan Luketina said it was due to falling shipping prices, which have reached their lowest level in almost six years, due to the drop in oil prices.

But he said the log price rise could be short-lived.

"A-grade export logs are up about 18 percent since September last year and that's solely due to shipping and foreign exchange price movements," he said.

"Buyers in China, however, are well aware of this effect and it's led them to push for decreases to the prices they are paying for delivered logs. There have been large decreases in inventory on ports in China, which has brought them back to near normal levels.

"This will be threatened soon, though, with the Chinese New Year shutdown approaching. With sales off Chinese ports well below a year ago, increases in inventory levels are likely to mean price decreases coming."

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