New Zealand’s sawn timber exports to China have been ‘hammered’, while raw log shipments surged in the wake of Beijing’s efforts to cool the economy and amid increased sales by rival forestry nations such as Canada, according to Scoop.co.nz.
Lumber exports fell 16% to $264 million in the four months ended Sept. 30, according to the report, citing New Zealand Timber Industry Federation figures. Exports to China fell 19 % to $44.7 million and shipments to the US fell 23% to $40.2 million.
Log exports rose 28% to $509 million in the four months ended Sept. 30. Exports to China rose 47% to $337 million and shipments to the Japan increased 16% to $30 million.
“Sluggish demand for lumber sees big excess capacity at Chinese sawmills,” said Brent Coffey, the federation’s head. “Construction is down so lumber for concrete formwork is down.”
Changes in demand in China are coming as a weak residential construction sector in New Zealand saps local demand. Companies including Fletcher Building have reported weaker profits in the face of a soft property market and delays in the rebuilding of Christchurch.
“It is a difficult economic backdrop” for the timber industry, said Philip Borkin, economist at Goldman Sachs New Zealand. Still, “the market is incredibly volatile and you have to be careful when reading between quarters.”
The lobby group’s report, in a newsletter that Coffey sends to members, comes after government data showed New Zealand’s forestry exports grew through most of last year on strong Asian demand.
In July, Ministry of Agriculture and Forestry data showed the total value of kiwi log exports rose $800 million to $4.4 billion in the 12-months ending March 31, driven predominantly by exports to China.
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