Arbor Resources Blog Updates
Local mills compete with export market - New Zealand structural log prices rose to the highest level for 25 years as local mills compete with the export market to secure supply for the domestic construction market amid strong demand from China.
The average price for structural S1 logs increased to $135 a tonne this month, from $134 a tonne last month, and marking the highest level since 1993, according to AgriHQ's monthly survey of exporters, forest owners and saw millers. The average price for New Zealand A-grade export logs hit a four-year high of US$145/JAS from US$144/JAS last month, and US$132/JAS a year ago.
In New Zealand, sawmills are competing with the export market to source logs for local construction, at a time when demand in China has stepped up after Asia's largest economy clamped down on the harvesting of its own forests and reduced tariffs on imported logs to meet demand in its local market.
"Export markets have remained an enticing avenue for log traders and there’s little to suggest this will change in the coming months," AgriHQ analyst Reece Brick said in his report. "China’s appetite for NZ logs means it’s still the price-setter for sales into other countries."
Nearly all AgriHQ survey respondents reported steady or marginally firmer pricing across structural S1 logs in the latest market survey, Brick noted.
The winter weather had slowed harvesting in some areas but had come at an opportune time as some North Island mills were experiencing softer-than-expected local demand for structural timber due to caution across the New Zealand housing sector, he said.
"Whether or not harvesting remains disrupted in the coming weeks is unlikely to make much difference to the medium-term direction of the domestic sales," Brick said. "The pull of the export market is still pushing forest owners to try and negotiate contracts at or near the export market level. This is a situation that is very unlikely to change in the next few months."
The volume of logs being taken from Chinese ports had slowed as a result of shorter working hours due to hot summer temperatures, however isn't uncommon at this time of year and coincides with slower harvesting in New Zealand, which should keep the market in balance in coming months, Brick said.
Forest products are New Zealand's third-largest commodity export group behind dairy and meat products. Trade data for May is due out Wednesday this week.
When it comes to timing, Sir Bob Jones certainly has the knack. With his widely publicised move to have a major commercial building in Wellington designed using wood for earthquake resistance, he has again affirmed his shrewdness for timing of commercial decisions. It is now catching on around New Zealand.
Just as Jones has chosen a mainly wooden structure for his office tower rebuild in the central business district of Wellington, developers up and down the country are moving quickly to capitalise on the benefits of engineered wood structures. As the engineers and architects leading the wood renaissance know, there are two key reasons why wood is soaring in popularity.
First and foremost, the engineering of wood for structures has grown rapidly as technology has made it more economical to manufacture large beams and panels for commercial buildings. More and more developers are recognising the advantages of cross-laminated timber (CLT) – the new wonder product for both flooring structures as well as walls, both with excellent earthquake resistant properties.
The second major breakthrough has come with more commercial acceptance of the need for sustainable materials to be used in office towers. Leading edge research in nearby Australia has confirmed that people working in wood buildings are happier and more productive than those in traditional concrete or steel structures.
“People tell the researchers they just feel better and more energised when working in spaces enclosed in real wood,” says John Stulen, engineer and conference director for the third annual Changing Perceptions engineered wood conference.
With this rapidly growing industry-leading conference running for the third time, Stulen and his team at Innovatek say they are delighted to have a technical conference programme that’s now 100% devoted to engineered wood projects in New Zealand.
“Over the past two years, we were fortunate to hear from leading engineers and project managers from Australia and Canada. Each time our audiences have asked for more New Zealand commercial projects, so we’re delighted to showcase exactly that this year,” says Stulen. “We were overwhelmed with the response to our call for speakers this year – all local projects.”
The conference has grown since 2016 and now attracts a wide audience of architects, engineers, developers, quantity surveyors and specifiers, as well as building officials and leading specialist trades focused on commercial buildings, like electricians, plumbers, heating/ventilating/air conditioning specialists and leading practitioners.
The Changing Perceptions Conference is full one-day programme on 28 August 2018 at the Distinction Hotel in Rotorua. The event begins with an evening reception on 27 August.