14 November 2011

In an article in the Gisborne Herald, industry leaders say export log prices have dropped over recent weeks because of excessive log stocks in markets like China and India.  Reducing the harvest in December-January will help rebalance supply and demand, especially in China.

Eastland Wood Council CEO Trevor Helson said there would be some slightly longer breaks than last year but only by a week or so at most.

“The industry needs to be careful it doesn’t overreact to these things. Over-supply in China is certainly an issue but it’s not a biggie.”

Hikurangi Forest Farms general manager Paul Ainsworth said they were reviewing what they would do but no decision had been made yet.  Ernslaw One Gisborne regional manager Iain McInnes said he had notified the company's contractors that the normal two-week break would be stretched to four weeks.

PF Olsen regional manager Nick Bunting said the company had not decided yet because they were waiting for December prices, expected at the beginning of December. But he said exporters were signalling that they would like to see supply constrained, as demand and supply would take some time to balance.

Pacific Haulage director Mike Treloar employs log truck drivers and has been working in the industry since 1979. An extended break meant his drivers would get a normal Christmas holiday like everyone else.

“The whole industry has been working hard for many years, with a short Christmas period, and it just means the ones who work really hard get a break.”

Pacific Haulage truck drivers worked an average of 60 hours a week but were guaranteed payment of 40 hours a week. This would mean a drop in income but they would still get paid over the holiday period if they went without work, he said.

Juken NZ Ltd manager Sheldon Drummond said JNL’s logging activity around NZ had recently reduced output to reduce the small volumes it exports as logs.

“We generally export only those logs that are less attractive for our processing operations. Our mills around NZ continue to be at, or near, full production. We are hopeful the production restrictions imposed on JNL East Coast crews will be released as earthquake rebuilding progresses during the next half-year.”

Mr Drummond said at present the log market into China had been oversupplied by both New Zealand and to a greater degree by North America.

“Coupled with the general over-supply of logs, the Chinese Government has made serious efforts to cap economic growth, which has impacted on their timber consumption. The current three-month log stock held on docks and log yards in China has meant there is now no credit available for Chinese buyers to purchase further shipments as well as a lack of space for storage.

"Coupled with reduced demand, this has resulted in a predictable fall in price," he said.

“Looking forward, the Chinese New Year will occur at the end of January and this halts consumption for the best part of a month every year. It is therefore unlikely that demand for logs into China will pick up within the next few months.

“For Juken New Zealand, we have been focusing on house refurbishments, which has been going quite well. We are planning to be well involved with the earthquake rebuilds in both NZ and Japan, as we have advanced and well-proven earthquake-proof buildings utilising JNL products.”

Source: Sophie Rishworth, Gisborne Herald. To read the full article, click here.