Although the price of logs exported to China decreases with the decrease of demand, in fact, log sellers pay a sharp rise in transportation costs, which greatly reduces the price of logs on local docks.

Due to reduced demand and increased transportation costs in China, the price of exported logs in August decreased by about 35 US dollars / m3 compared with that in July. The average decline of each grade is 30%.

China's CFR price class a log is priced at about 165 US dollars per cubic meter (JAS check scale). We expect China's log prices to rise steadily now, because COVID-19 blockade has led to a decrease in New Zealand logs supply and increased demand for logs in China. However, high shipping costs will limit the AWG price increase of New Zealand forest owners logs.

The PF Olsen log price index in August dropped from $139 to $118, a decrease of $21. This is the result of the decline in the AWG price of exported logs. The index is currently $5 lower than the two-year average, $6 lower than the three-year average and $7 lower than the five-year average.

New Zealand domestic log Market

Log supply and pricing

New Zealand had no harvest in the last two weeks of August.

Sawn timber market

The domestic market is waiting for the news of when the blockade will be lifted in Auckland and North Island. Auckland is the largest sawn timber market in New Zealand. Sawmill managers (except Auckland / North Island managers) do not consider the Auckland / North Island blockade a problem, but an opportunity to replenish inventory.

It is assumed that Oakland and other regions will be lowered to the 3 level by the end of August at the end of the COVID-19 blockade, so that they can carry out their business. After the blockade, demand will increase rapidly again.

Export log Market

AWG price

AWG prices are usually set at the beginning of each month. In August, exporters were very reluctant to set prices, and China's CFR price has not been confirmed because of the deadlock on the L / C price of ships en route. During this period, transportation costs increased and the New Zealand dollar strengthened, which did not contribute to the calculation of AWG. Once the dust settles, there are still differences in AWG between exporters, but it is different from that in July. The average decline in prices was about NZ $35 per cubic meter. The AWG price in Gisborne was again affected by high demurrage, but the ability to ship the ship during the 4 COVID-19 blockade eased the situation.

China

The price of class a logs is about 160 US dollars per cubic meter. Exporters pointed out that after New Zealand announced the covid blockade, log buyers immediately became more active. The blockade will last two weeks until the end of August. During this period, the ship was able to load, but all logging had stopped. This will help alleviate port congestion in Gisborne and Tauranga. The average monthly number of ships departing from New Zealand this year is 55. Fewer than 35 ships are currently planned for September. The reduction in supply is expected to help alleviate China's port congestion. At present, the waiting time of log ships has exceeded three weeks in Lanshan and Xinminzhou.

Cork log inventory did not increase last month, about 5.5 million cubic meters, although there was a large inventory on board. Last month, the daily port carrying capacity increased by about 15000 cubic meters to about 75000 cubic meters per day. Chinese market participants expect demand to increase further in September.

In August, sawmills in Lanshan area were subject to environmental inspection to determine whether they have met the set environmental objectives. It is hoped that this will not have a significant impact on log demand in the short term.

Prefabricated timber structure is the latest five-year plan for new buildings at the county level in China. This is a sign of the increase in log consumption in China. In June, China's Ministry of housing and urban rural development (MOHURD) issued the official guidance on strengthening green and low-carbon construction in counties. The policy contains specific requirements for the development of the county, and stipulates that the newly-built houses in the county shall be mainly 6 floors, which shall not be higher than 18 floors in principle. The proportion of new residential buildings with 6 floors and below shall not be less than 70%. The realization of the requirements of this guide shows the important opportunities of wood frames and prefabricated wood structures in buildings.

India

Due to negative sentiment and seasonal factors, the sawn timber price in kandra is weak, with INR 591 per CFT. Candela's log market is expected to have about 9 ships from Australia, New Zealand and Uruguay arriving in September and another 5 ships arriving in October.

When Tuticorin receives the cargo from Uruguay, they will receive the first bulk log ship in about three years. They used to receive log shipments from New Zealand. The shortage of containers makes the freight quotation of shipping companies too high, which makes it difficult to transport logs in containers.

The Indian monsoon should subside in September. Log buyer sentiment is expected to become more positive in October. The new fiscal year in North India starts from the Diwali festival on November 4, and demand should increase to the end of the year.