Immediate outlook for log exports is not great and prices are likely to soften on weak China demand, a very competitive Indian market, & higher shipping costs. Domestic demand will be no saviour

The At Wharf Gate (AWG) prices for export logs remained flat in March. Demand has only recently started to increase in China and daily log demand is now 60k m3 per day. AWG prices in New Zealand in Quarter 1 2005 have benefitted from relatively low shipping costs and a weaker NZD. Quarter 2 is shaping up as a more difficult quarter with shipping costs increasing and the NZD strengthening against the USD. Log exporters cannot obtain price increases in China to cover these increased costs. Indeed, market prices seem to be softening.    

The domestic log and timber market in New Zealand remains quiet with building consent approvals trending at multi-year lows.

The PF Olsen Log Price Index remains at $123. The Index is now $5 above the two-year average, and $2 above the five-year average.

Domestic Log Market

Demand for timber in New Zealand remains weak, reflecting the broader slowdown in the construction sector. Building consent approvals have been trending at multi-year lows, with residential and commercial construction projects facing delays or cancellations due to high financing costs and reduced government spending on infrastructure.

• Residential construction remains particularly weak, as high mortgage rates and economic uncertainty discourage new builds and renovations.
• Commercial and infrastructure projects have also slowed, with some projects postponed or scaled back due to funding challenges and government budget cuts.

Export Log Markets

China

China softwood log inventory has reduced to just over 3.7 m m3 and log demand has increased over the last month with port off-take of logs currently about 60k m3 per day.

The CFR price for logs is softening with a widening price range achieved by exporters. Towards the end of March, most exporters are selling A grade logs in the range 115-117 per JASm3.  There are very recent reports of two exporters offering 113 USD per JASm3 for A grade logs.

The Caixin China General Manufacturing PMI rose to 50.8 in February 2025 from 50.1 in the previous month, surpassing market expectations of 50.3. This marked the highest reading since last November, with output and new orders growing the most in three months. Foreign s ales also increased for the first time in three months.  

In early March, China suspended imports of U.S. logs, citing concerns over pest infestations detected in shipments. This action is part of broader trade tensions between China and the United States, with China also imposing tariffs on various U.S. agricultural products. ​

The Chinese government has maintained its economic growth target at approximately 5% and is implementing stimulus measures to mitigate the impact of rising U.S. tariffs. This proactive approach aims to sustain infrastructure projects and construction activities, thereby supporting continued demand for imported logs. ​ Domestic pricing for logs in China is still weak with poor market sentiment. 

India

India is abuzz with the possibility of a New Zealand - India Free Trade Agreement.  The Indian and New Zealand governments have set some optimistic timeframes for these discussions. While there is doubt this timeframe is realistic, it does show good intent from both parties. If New Zealand’s logs get import duty exemption in India, it will place New Zealand logs at parity with Australian logs.

The Kandla market is stable due to labour shortages in sawmills and the resultant lower production levels of sawn timber lumber. The Gandhidham prices are for swan timber are the same as in February, 491 INR per CFT for taeda pine green sawn timber and 521 INR per CFT for radiata pine green sawn timber.

Approximately seven shipments of logs will arrive in Kandla in April, two from New Zealand three from Australia, plus a couple from South America.

High charter hire costs are increasing transport costs from both Atlantic and Pacific routes to Kandla. New Zealand and Australian log exporters are selling logs in the CFR price range 125-132 USD for A long LC 150 days.

Tuticorin continues to receive logs in containers from South Africa, K grade at 125 USD per metric tonne CFR LC 180 days. Green sawn timber is sold at 601-621 INR levels.

Exchange rates

The NZD has strengthened by just over 2% against the USD through March. This will put pressure on April AWG prices for export logs in New Zealand.

NZD:USD

The CNY has overall been more stable against the USD.

 CNY:USD

Shipping costs 

The cost of shipping logs from New Zealand to China continues to steadily rise with a two-port loading from the North Island to China, now in the mid 30’s USD per JASm3 with South Island port calls more expensive.

The Bulk Dry Index (BDI) shown below is a composite of three sub-indices, each covering a different carrier size; Capesize (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.  The BDI index is now at its lowest point since February this year. This decline is shown across all vessel segments.    

^{Baltic Dry Index (BDI)
Source: TradingEconomics.com}

^{Singapore Bunker Price (VLSO) (red line) versus Brent Oil Price (grey line)
Source: Ship & Bunker}

PF Olsen Log Price Index - March 2025

^{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.}

Indicative Average Current Log Prices – March 2025

Note: Actual prices will vary according to regional supply/demand balances, varying cost structures and grade variation. These prices should be used as a guide only.

A longer series of these prices is available here.

This article is reproduced from PF Olsen's Wood Matters, with permission.