​Globally traded softwood lumber reached an all-time high in 2016. WRI estimates that 118 million m3 of lumber was traded last year, or 10 percent more than in 2015. Imports to the US account for about one-third of globally traded lumber and have almost doubled in five years. China accounted for about 17% of import volumes in 2016, followed by the United Kingdom, Japan and Germany. 

Lumber markets – North America

Lumber production in North America in 2016 was up six percent from the previous year, reaching its highest level since 2007. The biggest rises in production occurred in the US South and Eastern Canada, while the increases in western Canada and the western US were more modest. 

Prices for lumber in the US have jumped during the first four months of the year to hit a 13-year high in April. Many of the commonly traded grades surged in price by more than 20% from April of 2016. 

Lumber markets – Northern Europe

Sweden exported 12.9 million m3 of softwood lumber in 2016, which was the highest volume exported since 2006. The increase from 2015 was a modest 1.5%, with shipments to Denmark, Japan, China and France rising the most. Domestic lumber prices in both Finland and Sweden continue to be close to their lowest levels in ten years in US dollar terms, as reported in the Wood Resource Quarterly. 

Lumber markets – China

Prices for imported softwood lumber to China have been in a steady upward trend during 2016 and 2017 with the average import price in March 2017 being 13% higher than 18 months earlier. The biggest change in pricing over the past two years has been that prices for Russian lumber are no longer substantially cheaper than those for lumber from other supplying regions, but instead are rather close to the average import price. 

Lumber market – Japan

Total housing starts were up 3.2% in Japan in the 1Q/17 as compared to the same quarter in 2016, and the economic outlook for the coming year is slightly more optimistic than that for last year. 

Prices for domestic and imported lumber have remained practically unchanged for almost a year in Yen terms. With the Yen strengthening against the US dollar during the first four months of 2017, lumber prices have increased so far this year in US dollar terms. 

Lumber market – Russia

After a substantial decline in softwood lumber export prices during 2014 and 2015, Russian lumber prices have trended upward for most of 2016 and early 2017. Average export prices in March 2017 were 12% higher than in the same month last year, and prices for wood going to China have gone up even faster over the same time-period. Export volumes to China in the 1Q/17 were unchanged from the previous quarter, holding steady at the second highest level on record. 

Source: Wood Resources International LLC

​New Zealand structural log prices have hit their highest level in more than two decades as local mills compete with the export market to secure supply to meet demand from the domestic market. 

The price for structural S1 logs lifted to $124 a tonne this month from $123 a tonne last month and $114 a tonne at the same time last year, reaching the highest price for the grade since April 1994, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. 

"The New Zealand domestic log market has slowly but consistently risen this year, and the past month was no different," AgriHQ analyst Reece Brick said in his report. "Supply and demand fundamentals remain skewed in favour of sellers rather than buyers, squeezing even more returns out of harvested logs." 

The market remains strong for most segments of the domestic industry, even as the volumes traded slowed when winter weather stymied construction activity, AgriHQ said, noting that local wood supply had been hampered due to difficulties harvesting in wet weather. While strength in the local housing market is helping stoke demand, the main driver behind higher domestic prices is that export markets are draining supplies out of New Zealand, the report said. 

"Domestic mills are in a tug-of-war with export log traders for unpruned logs and are facing the prospect of further hikes in log procurement costs," Brick said. "A large portion of mills are still paying below the export market for logs. Log suppliers are currently attempting to gauge mills ability to absorb higher log prices. All signs suggest more increases are on the cards." 

Prices in the log market are heavily reliant on Chinese demand, which is expected to hold in the medium term after the Chinese government introduced restrictions on logging native forests and reduced tariffs on imported logs to 11 percent from 13 percent to discourage the use of native wood, AgriHQ said. 

New Zealand exported 1,666,639 cubic metres of logs in April, up 3 percent on March volumes and 21 percent higher than a year earlier. Some 72 percent of the volume was exported to China. "The volume exported in April is one of the largest amounts exported in the last 10 years and is only surpassed by August 2016," Brick said. 

The value of log exports is expected to climb to NZ$2.66 billion this year from NZ$2.22 billion last year and reach $3.14 billion in 2021, according to the latest Situation and Outlook for Primary Industries published by the Ministry for Primary Industries last week. 

Source: Scoop

Global demand fuelling NZ forestry export growth

Strong demand from key markets is driving up export growth in forestry products, New Zealand’s Associate Primary Industries Minister Louise Upston says. The latest Ministry for Primary Industries’ Situation and Outlook for Primary Industries (SOPI) shows strong growth in the forestry sector. 

“Forestry exports are expected to grow 6.4 per cent to NZ$5.5 billion in 2017, before increasing further to NZ$6.3 billion by 2021 as increased volumes of wood become available for harvest,” Ms Upston says. Strong demand for logs and sawn timber from key markets such as China and the US are keeping prices high while favourable exchange rates are also contributing to strong returns for exporters, the SOPI shows. 

Demand is expected to remain strong, as increased construction activity in China and the US, combined with China’s bans on harvesting native forest should ensure continued demand for New Zealand logs and sawn timber. 

“With a bright outlook for forestry production and exports, the Government continues to invest in improved harvesting techniques. This investment is primarily through the Steepland Harvesting Primary Growth Partnership programme, which also encourages afforestation by allowing previously unsuitable land to be planted with production forestry,” Ms Upston says. 

Planting is encouraged through other programmes such as the Afforestation Grants Scheme, the Erosion Control Funding Programme and the Sustainable Land Management and Climate Change research programme.​Global demand is  fueling NZ forestry export growth