The Ministry of Agriculture and Forestry says demand for New Zealand wood has increased in Japan as it reconstructs buildings destroyed by the March earthquake and tsunami.
The forestry trade and production figures for the three months to June show the demand from Japan helped to push up total wood panel production by 10%.
That includes manufactured woods such as plyboard, fibreboard and particle board, used in buildings.
Acting manager of sector infrastructure Andrew Doube says he expects demand from Japan to remain strong for the rest of the year.
He says the extra demand has helped to offset an 18% fall in sawn timber exports.
Mr Doube says exports of panel production to Japan are up from 40% of total production in the June 2010 quarter to about 48% this quarter.
He says forestry made a contribution of $1.2 billion to the New Zealand economy, an increase of about $85.6 million over the quarter.
Log exports continue to be dominated by China, he says, which took almost 60% of New Zealand's exports in the June quarter.
Timber industry waiting for Christchurch rebuild
The Timber Industry Federation says the hike in demand for wood for the Japan rebuild won't help it, because it doesn't process those products.
The industry is still waiting for the Christchurch earthquake reconstruction to start, to boost its declining production.
The forestry production and trade figures for the June quarter show sawn timber exports fell almost 18%, with production dropping by 10%, due to high domestic log prices and weak demand.
Chief executive Brent Coffey says the future looks brighter for sawmillers in the lead-up to Christchurch's reconstruction.
He says timber buildings performed well in the earthquake and he's heard a lot of the rebuild will be with timber.
Mr Coffey says housing stocks, particularly in Auckland are low so there is likely to be some pent up demand from there as well.