PF Olsen NZ Log Market – May 2023

5 June 2023

Market Summary

At Wharf Gate (AWG) prices for export logs further decreased an average of $22 per JASm3 in May. The AWG prices have now dropped to their lowest prices since July last year. The CFR log sale price in China for New Zealand pine A grade has dropped to 108-115 USD per JAS m3. Softwood inventory and log demand in China has remained steady, but market forecasts of an increase in construction activity have not eventuated and an increase is now less likely as China enters its hotter months of June-August when construction activity traditionally reduces.

The May PF Olsen Log Price Index decreased $11 to $113. The index is the lowest since July last year. The index is currently $9 below the two-year and $10 below the five-year average.

Domestic Log Market

Domestic log demand has reduced with many mills reducing their log orders. Prices are stable as they are generally set for Quarter 2. The local structural market in particular is oversupplied. Many DIY projects such as building decks and other home improvements were done during Covid lockdowns. Households also have reduced discretional spends. New build starts have slowed. Logistical warehousing builds are still ongoing but these have reduced timber input compared with dwellings.

Export Log Market


China softwood log inventory has dropped to about 3m m3 with radiata accounting for about 2.75 m3. Port off-take has remained steady ranging round 70k per day. Usually construction activity drops 10-15% in the hotter months of June to August. Most commentators think we won’t see such a significant drop this year, as construction is already at a lower yet consistent level. There is also low inventory through the supply chain, so daily port offtake wont drop at the same rate as productivity.

The CFR price for A grade radiata logs in China has dropped to 108-115 USD per JASm3.

China also has increased supply from domestic harvesting of Masson pine in southern and central China and Poplar in Northern China. These sell for an average price of 800 RMB per m3 which equates to 113 USD. The 2020 ban on sending Australian logs and timber to has now been lifted. This was a political spat thinly disguised by China as a quarantine risk. Log buyers in China don’t expect much log volume from Australian suppliers, and especially at current pricing levels. In many cases infrastructure needs to be reinstated and this cost isn’t justified at the current pricing level.

The biggest issue for log buyers and construction companies in China remains cashflow constraints. The construction sector in China has the longest average payment delay of any sector in China with an average of 96 days.

The China Caixin manufacturing PMI dropped to 49.5 in April. This was the first contraction in factory activity since January. The optimism earlier in the year seems to have reduced with the property market not increasing activity as forecast and fears of a global slowdown.


Prices for green sawn timber in Gandhidham have remained steady over the last three weeks. Green sawn timber from South American pine sells for 501 INR per CFT while Australian radiata green pine sells for 561 INR per CFT. The price for European kiln dried sawn timber is 621 INR per CFT.Demand is low for all construction materials.

Running a business in India is getting expensive as banks prefer to lend lower risk home loans. The disparity between interest rates on home loans and business loans has increased. Home loan interest rates in India are about 10% while interest rates on business loans are between 10 and 25%.

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Scott Downs, Director Sales & Marketing, PF Olsen Ltd

Source: PF Olsen