Wood Matters

Log Market – April 2023

Published on
Scott-331 Scott Downs
Director Sales & Marketing
PF Olsen Limited

Market Summary

The April PF Olsen Log Price Index decreased $11 to $124. The index has now reversed all the gains from the previous two months and is back at the January level. The index is currently $2 above the two-year and $1 above the five-year average.

Domestic Log Market
Most sawmills in New Zealand remain operating well below capacity. The structural market remains oversupplied. Some mills that were producing structural sawn timber are switching to instead produce clear sawn timber.

Export Log Market

China softwood log inventory has dropped to 3.2-3.3m m3 with radiata accounting for about 2.9m m3. The stimulation packages announced by the Chinese government has not increased construction activity in China. Port off-take has remained steady at just over 70k per day.

The biggest issue for log buyers and construction companies in China is cashflow constraints.

The CFR price for A grade radiata logs in China has dropped to 120-125. May expected price ranges are 115-20 USD for A grade. Buyers that were buying logs at too high a price earlier in the year now aim to buy logs at a much lower price to recover their losses. More than ever the importance of strong relationships and trust individual log sellers have with log buyers allows for a more stable ride through this fluctuation.

The China Caixin manufacturing PMI dropped to 50.0 in March. The index is now balancing on the significant level of 50. (A reading above 50 indicates an expansion of the manufacturing sector). This result shows the growing doubt about the strength and robustness of China’s economic recovery.    

Prices for green sawn timber in Gandhidham have fallen. Green sawn timber from South American pine sells for 501 INR per CFT while Australian radiata green pine sells for 561 INR per CFT. The price for European kiln dried sawntimber has fallen to 621 INR per CFT.

European pallet grade kiln dried lumber is affecting the demand for locally sawn green lumber.

Cheap Indian pine and poplar logs from Himachal Pradesh and Haryana states respectively also reduce the demand for imported pine.

The market anticipates two log vessels arriving in Kandla in May, one each from South America and Australia. Supply from logs in containers from Australia has stopped as container rates have skyrocketed.

Exchange rates
The NZD increased over a cent through March against the USD and this didn’t help with the reduction in AWG prices. The NZD has weakened by one and half a cents against the USD through April, and this will ameliorate the expected drop in May AWG prices. The CNY has recently weakened against the USD. 






Ocean freight
Demurrage from port congestion is the biggest issue for shippings costs from New Zealand. Port waiting times are averaging just over 10 days in Gisborne and Tauranga. Even ports in the upper South Island have experienced unusual congestion due to vessels arriving at the same time.
The Baltic Dry Index (BDI) is a composite of three sub-indices, each covering a different carrier size: Capsize (40%), Panamax (30%), and Supramax (30%). It displays an index of the daily USD hire rates across 20 ocean shipping routes. Whilst most of the NZ log trade is shipped in Handysize vessels, this segment is strongly influenced by the BDI. 
Trading economioca

Source: TradingEconomics.com

Singapore Bunker Price (VLSO) (red line) versus Brent Oil Price (grey line)
Source: Ship & Bunker


PF Olsen Log Price Index - April 2023

The April PF Olsen Log Price Index decreased $11 to $124. The index has now reversed all the gains from the previous two months and is back at the January level. The index is currently $2 above the two-year and $1 above the five-year average.

PF Olsen log price-281

Basis of Index: This index is based on prices in the table below weighted in proportions that represent a broad average of log grades produced from a typical pruned forest with an approximate mix of 40% domestic and 60% export supply. 

Indicative Average Current Log Prices - April 2023

Please note these are AWG prices at North Island ports and that South Island prices are commonly lower due to higher port and shipping costs.


Note: Actual prices will vary according to regional supply/demand balances, varying cost structures and grade variation. These prices should be used as a guide only and specific advice sought for individual forests.​​​