Director Sales & Marketing
PF Olsen Limited
AWG prices increased an average of $15 due to the higher CFR sale prices in China. The positive impact of higher log prices was reduced slightly by increased shipping costs, while the exchange rate had little impact. CFR Log prices in China have increased but the market is still fragile. Inventory of New Zealand pine in China is stable and log demand is typical for this time of the year. Global pulp inventory levels are at record highs with very low demand.
The domestic market remains subdued.
New Zealand also tends to go into a holding pattern before a general election.
The (BHK) producer inventory volume reading is below the the historical peak in mid-2019, while BSK inventory volumes continue to set new record highs each month. This excess inventory is expected to persist as demand remains low and new supply enters the market.
Total Chemical Market Pulp Producer Inventory
Source: PPFC, Fastmarkets
China radiata log inventory has remained at around 2.7 m3. Daily port off-take has reduced slightly but remains steady ranging between 60-70k m3 per day, which is in the normal range for this time of the year in China.
Macro economic indicators from China continue to worsen which indicates the demand for logs in China will not increase as it usually does when China enters its normally busiest construction time of the year.
The China Caixin Manufacturing PMI continued to fall from 50.5 in June to 49.2 in July. Manufacturing conditions picked up for the second month in a row, but at slower levels then in May. Any PMI number above 50 signals manufacturing growth. This was its lowest reading in six months and the first drop in factory activity since April. New orders dropped after growing in the prior two months while foreign sales contracted the most since September 2022. Buying levels decreased for the first time since January.
The demand for pine logs in Kandla is lukewarm due to monsoon rains. Uruguay to Kandla shipments have reduced to only one vessel for August departure and September arrival. CIF price is 118 to 120 USD per JASm3. The price for Uruguay green pine sawn timber in Gandhidham is soft at 491 INR per CFT. Australian radiata pine green sawn timber is sold at 531 INR per CFT. Seasonal demand may occur in Kandla in November, after the Diwali festival.
Tuticorin is sourcing South Africa pine logs in containers at 110 USD levels. Green pine sawn timber is selling within a range of 550 to 575 INR per CFT.
Currency graphs source: XE
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.
Singapore Bunker Price (VLSO) (red line) versus Brent Oil Price (grey line)
Source: Ship & Bunker
The PF Olsen Log Price Index increased $6 in August to $114. The index is currently $5 below the two-year and $8 below the five-year average.
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.
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.