Log Markets and Ocean Freight Rates

Little change to report this month. Export log prices firmed slightly this month based on a rise in China-side log prices. The anticipated fall-off in demand forecast by many commentators never eventuated and inventory is at comfortable levels. NZ Log export volumes for 2009 are set to exceed those of 2008 by around 2 million m3.

Russia again deferred its proposed rise in export log tariffs. An extended moratorium is better than the removal of the planned increase or a possible reduction in the duties (which was signaled a little while ago for companies actually undertaking new processing in Russia).

Ocean freight rates have firmed significantly in the passed two weeks, perhaps based on exporters wishing to clear stocks prior to the Christmas break. Hopefully this is a temporary upward blip.

Domestic log prices were steady with small rises in pruned and some structural grades. Log processors are reporting a lift in orders of finished product for the domestic market.

The NZX Agrifax Combined Log Price Index, which measures returns from the whole forest, lifted almost two points to NZ$76/tonne.