Steady and strong competition from foreign buyers for New Zealand logs is forcing raw material prices up for local timber processors. The New Zealand Timber Industry Federation says that log prices have already risen by 25% to the local market over the past five years and sawmills are preparing for further predicted log cost increases over the first half of 2018.
Logs are a sawmill’s biggest single cost so the financial impact is significant. Local sawn timber prices have not kept pace with the recent log cost increases. Timber prices have risen by just 7% in the last five years.
Log volumes and prices for export and domestic markets are now reaching the highest levels ever recorded in a market that appears to be stable and not speculative. Log supply to local sawmills is competing with the strong export markets, especially China, as that market continues to grow.
New Zealand exporters have spent decades pushing Radiata Pine as a species and product. Overseas buyers now understand and appreciate the many potential uses of Radiata Pine. This is fuelling the demand and making Radiata Pine a preferred species in many cases.
The latest survey conducted by Scion (http://www.scionresearch.com)) “New Zealand Log Price Outlook – November 2017” released 1 January 2018, predicts that log prices will rise in February and continue to increase until May before levelling out.
The New Zealand Timber Industry Federation says that timber prices will increase as sawmills look to secure sufficient log supply to keep mills running and to recover the increased log costs. Buyers of finished timber products anticipate future price increases.