13 Apr 2015

Drop in raw log price brings relief

3:04 pm on 13 April 2015

Wood processors - under pressure from a high New Zealand dollar - may gain a little relief from another drop in export log prices.

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Photo: 123RF

Timber processors have to pay export rates for raw logs, and prices reached record levels before falling last year due to a glut in the main market, China.

Prices recovered later in the year, but the Forest Owners Association chief executive, David Rhodes, said they had slipped again recently, due to conditions in China.

"The China market is a little overcooked at the moment. There are very high inventory levels up there and we've got some (anti-pollution) measures being taken by the Chinese government as well, which is subduing demand a bit, so the price has come back quite a bit.

Mr Rhodes said it had dropped between $10 and $15 a tonne, which was still quite significant "and it may well go lower".

"The processors here, if they are competing against a lower international log price, then yes, it will bring some relief. But on the other hand, we've also closed in on parity with the Australian dollar now (in the wood manufacturers' biggest market).

"So, swings and roundabouts. It's still fairly tough conditions out there for domestic processing."