China’s softwood log inventories have stabilised at 3.0 million cubic metres following the Chinese New Year period, with daily log offtake tracking at 55,000–60,000 cubic metres per day and spot CFR prices for A-grade logs firming $8 per JASm³ to USD $125 — the first meaningful recovery in prices at Chinese ports since late last year. That is according to Scott Downs, General Manager of Sales and Marketing at PF Olsen, whose March log market report also recorded a 4.5 per cent rise in Chinese log futures prices over the past two weeks, pointing to improved short-term sentiment.
The supply-side picture, however, is tightening well below the port gate. “Many forest owners are seeking increases in domestic log prices for Quarter 2, as higher harvesting and cartage costs continue to erode margins,” Downs said, noting that New Zealand harvesting operations consume approximately four litres of diesel per tonne of logs produced, with a further two litres required for every 100 km of road transport. In direct response, a broad cohort of forest owners has trimmed harvesting to 80 per cent of capacity, whilst some smaller operators have temporarily suspended operations.
As it stands, New Zealand supplies 60 per cent of China’s logs, with supply expected to ease further from April as autumn weather tightens harvesting conditions and the combined productivity drag of Easter and ANZAC holiday periods reduces available working days — creating, as Downs put it, a challenging environment where rising input costs may not be fully recoverable through higher log prices, whilst supply-side responses risk tightening domestic availability. It comes amid a challenging period for log traders, with China recording its fourth consecutive decline in log imports, with volumes now half the Covid-era peak.
And like China, the Middle East crisis is having an impact on Indian shipments, with a number of bulk pine log shipments deferred or cancelled due to rising freight costs and security concerns — though Downs noted some exporters have since signalled a return, with CFR prices for A-grade logs at Indian ports currently around USD $142 per JASm³. At the same time, the Gandhidham green sawn timber market strengthened by 9–10 per cent, driven by higher input costs and supply disruptions, with pricing reaching INR 631 per CFT for radiata pine.
The Caixin China General Manufacturing PMI edged to 50.9 in February from 50.3 in January, offering some respite amid ongoing concerns over China’s property market, though Downs noted the reading was insufficient to shift the cautious tone running through the supply chain at Chinese ports. The PF Olsen Log Price Index rose NZ$1 in March to NZ$122 — NZ$2 above the two-year average — with At Wharf Gate prices across North Island ports gaining a further NZD $2 per JASm³, as a NZD that has weakened approximately 4.6 per cent against the USD over the past month provided partial offset against freight costs Downs described as the key determinant of April AWG pricing.
- To learn how diesel trading at NZD $2.34 per litre — up 80 per cent in a month — and shipping rates into China jumping 36 per cent in four weeks are pushing New Zealand’s logging companies to the brink, click here for Wood Central’s special feature: NZ Forestry Faces Double Hit — Diesel Up 80%, Shipping Up 36%.
