Arbor Resources Blog Updates
UPDATED INFORMATION OF TIME LINES BELOW IN RED FOR YOUR SPECIAL ATTENTION.
Dear all valued customers
As per company plan, Arbor factory relocation will be starting and carried out in the 4th Quarter this year.
While this project is happening, all the kilns and plant will be uninstalled. As a result, it will affect the processing and production.
Therefore, we would like to post this notice to make you all aware of this schedule, and meanwhile we request that all orders are to be confirmed before 30th Sept 2019, so that we can prepare the products for you and store at our place for shipments in the months of October and November 2019.
AS PER SCHEDULES, THE PLANT WILL BE UNINSTALLED IN EARLY TO MID NOVEMBER, WHILE THE KILN DRYING FACILITIES ARE TO BE TAKEN DOWN AT THE END OF OCTOBER.
RELOCATION WILL LIKELY BE COMPLETED AT THE END OF JANUARY 2020. AFTER THE KILNS BEING TUNED FOR PROPER DRYING PROCESSING, OUR EARLIEST NEW SHIPMENT SCHEDULES WILL ONLY BE ETD NZ IN MID-LATE FEBRUARY 2020.
THEREFORE WE WOULD APPRECIATE IT IF YOU CAN CONFIRM YOUR ORDERS FOR HT DRY TIMBER WITH US BEFORE THE END OF SEPTEMBER FOR ALL SHIPMENTS ETD NZ PORTS REQUIRED FROM NOW UNTIL MID-LATE FEBRUARY 2020.
IT IS IMPORTANT TO INFORM YOU THAT DURING THE PERIOD OF TIME WHEN KILNS ARE DOWN, THE ONLY PRODUCTS WE CAN SHIP ARE GREENSAWN PRODUCTS AND PART OF AIR DRY PRODUCTS WITH FUMIGATION (STILL ISPM 15 COMPLIANT, BUT THEY ARE NOT HT KILN DRY).
There will be no shipments in the month of December 2019.
Important Cut-Off Times:
Order Acceptance Cut-Off: Monday 30th September 2019. We must have your LC or deposit payment received on or before this date as a confirmation of your order.
Shipment Cut-Off: Saturday 30th November 2019. All orders must be shipped on or before this date.
Please review and prepare your orders if you have demand. Thank you.
You will be aware that in early July, following the significant reduction in export log prices, we carried out a full review of our harvest operations. We subsequently instructed our forest managers to place harvest production caps on their contractors of approximately 25%. Over the past two months, we have monitored the export log markets and as advised in July, have now undertaken a further review of our harvest operations now that we have the September prices from the exporters.
What has happened to pricing since then?
You will have seen from the abbreviated August review that log prices have risen from their July lows. Recent September prices have also shown another incremental increase. Overall prices have risen approximately 10% from the July lows and have recovered more than 25% of the June to July fall. This is welcome news for all harvesting forests.
The market summary
This month we engaged once again with our two major log exporters to obtain a market update. Between them they export approximately 30% of New Zealand’s logs. The overall sentiment is that the Chinese markets have stabilised since the dramatic price decreases in July. While our exporters expect further incremental price increases into the end of 2019, they remain cautious in their longer-term view. We discussed the many drivers for those log price reductions in our July correspondence, below is an updated summary of changes since that July review.
Price expectations from here?
The unfolding supply/demand pressures are creating positive tensions and exporters expect this theme to continue and for log inventories to decrease. This should be the key driver for prices to continue with incremental moves upwards. There appears to be a consensus that log prices could move toward $120-$125 over the next three months as a result of supply and demand pressures. Most caution remains around the trade wars and the medium-term impact this is having on both the Chinese and USA economies; it is for this reason that price increases are expected to remain modest.
RDNZ initiatives going forward
Given the modest recovery and upward trajectory of export log prices since we last reviewed them in July, RDNZ has decided to take the following initiatives. Please note the viability and extent of these initiatives may vary from forest to forest for a variety of reasons. The specifics for your forest will be discussed subsequently. Key initiatives are:
Log prices in NZ have improved slightly, after falling to their lowest level in four years. In July a backlog of imports into China, a downturn in demand, and nervousness over its trade war with the United States pushed prices down about 25 per cent to their lowest point in four years.
AgriHQ forestry analyst Reece Brick said A-grade logs, which were considered the benchmark grade, had for six months been sitting around $150 - $145 per JASm3 (Japanese Agricultural Standard cubic metre), but in the space of two weeks fell sharply to $105.
Mr Brick said the wider forestry industry was still feeling the strain from the recent Chinese log price re-adjustment. But he said prices had recovered slightly, helped by a small decrease in port-level inventories. Latest figures from August showed A-grade log prices were now sitting at $110 per JASm3.
Mr Brick said while it was hard to quantify, it was estimated there had been a 20 per cent drop-off in harvesting while some in the industry opted to wait for prices to improve. Most of the people that have stopped harvesting now are those with woodlots planted 25-30 years ago and who are looking to cash.
"They can only really make money in one go. The bigger companies, which have constant harvesting rotations, they're just going to keep on going as per usual more or less."
Mr Brick believed those in the sector were cautiously optimistic that prices would start picking up in the short term, although they were still a long way from the record high levels seen earlier in 2019.
"Volumes leaving New Zealand shores are already tightening, which is expected to impact on China from September/October, when Chinese log use usually increases. This is creating some level of confidence that the market should rise from here to the end of the year," he said.