New Zealand: Log exports up 79% in August

Sep 25, 2009. /Lesprom Network/. The national economic report from Statistics New Zealand said the economy was turning the corner largely on the back of the primary industries, which were up 1.5% for the June quarter, driven by an 8% increase in forestry and logging. That increase was due to an increase in log exports to China, as Gisborne Herald reported. But in Gisborne log exports have been increasing at around 10 times that rate, with Eastland Port expecting to hit a new record this month. For the first time, volumes are expected to exceed 120,000 cubic metres of timber, which is 20,000 cubic metres up on the 100,000 cubic metre record set earlier this year. The year-on-year growth in August was up 79%, from 57,637 cubic metres last year to 103,020 cubic metres this year. In April, it was up 65% on the previous year. “The vast majority of this growth in volume has been exported to China, where exports have increased from 1.3 cubic metres in 2007 to a forecast 4.5 cubic metres in 2009,” said Eastland Port manager Andrew Gaddum. “This increase in demand has been driven by a high level of government-financed infrastructure spending in China, and the increasing costs and uncertainty around China’s traditional log supply from Russia. “The general consensus in the industry is that the demand for NZ logs will hold up as long as freight rates and the NZ dollar do not get out of hand. Current shipping rates seem to have stabilised after a period of increase, however the growing strength of the New Zealand dollar is of real concern.” he said. Eastland Wood Council chief executive Trevor Helson said that apart from the increased demand from China, growth in the industry here was also driven by growth in supply as the long-awaited wall of wood came on-stream. “There is a lot of wood sitting here, and the Asian and Chinese markets want to buy it,” he said. How long exports of logs over local wharves continued to grow at this stage depended mostly on the New Zealand dollar, the continued strength of which was not helping. Although the high level could be a short-term blip, its variability made the market hard to forecast. It was extremely difficult for exporters to know at what level their returns would be — there was little room to move with their fixed costs. Growing volumes were placing pressure on infrastructure here, especially constraints on storage space at the wharf. Overflows were temporarily stored at the airport but this added to freight costs because it involved a lot of double handling. While log exports remained in positive growth throughout the recession, the same could not be said for manufactured timber. It was closely linked with the offshore construction industry, which was still very difficult. Eastland Group, which owns Eastland Port, has indicated it is not keen to invest in export infrastructure ahead of need and the international log market is a hard one to predict.