The Indian log market is slowly adjusting to a new exchange rate of Rs 73 to 1 USD.
Two of the main New Zealand log exporters to India decided to not ship logs for October and this will help deplete unsold inventory. However, some of the more determined NZ exporters continue to ship without respite, putting immense LC pressure on the buyers. Many buyers have had to use third party LC opening agencies to stay afloat in terms of cash flow.
The Indian market for New Zealand logs closely follows the China market dynamics and an increase in the log price in China in should lift the morale of importers and spur renewed activity.
Log exporters feel a turnaround in demand and pricing should occur in Dec/Jan. However, this is contingent on stability of the INR against the USD, and no more surprises on the trade war situation between China and USA. The NZ pine inventory in Kandla sawmills is not very high (20-25 days stock) but there are recent arrivals of NZ cargo being discharged in the port where sales have been agreed, but LCs not received. Furthermore, there is more than 30,000 JAS m3 unsold stock being moved into the custom bonded area in Port of Kandla. This will be cleared from Custom Bonded Zone only when LCs are received.
Indian Banks continue with a generally cautious approach and LCs in USD are hard to obtain across different import categories in the country. The merger of Bank of Baroda, Vijaya Bank and Dena Bank- to cover up large quantum of Non-Performing Assets (NPAs or bad debts)- has not changed sentiments for Public Sector Banks. The need for good governance in the Indian banking sector has become paramount