5 July 2012
High quality pruned radiata logs are currently in high demand from China, with prices 50 per cent higher than similar logs from unpruned trees, says Forest Owners Association chief executive David Rhodes.
“Cots for year of the dragon babies are a major driver of this, along with furniture fashion trends generally. In China, as elsewhere, the preference is for furniture made from light-coloured knot-free timbers. Wood from pruned New Zealand radiata is ideal for this.”
Although the logs seen on logging trucks and in stacks on wharves come in a wide range of sizes, all are carefully sorted and graded before export to China and other markets in Asia.
Quality pruned logs, the cream of the crop, are used for furniture. Unpruned logs are sorted into four or five grades, depending on the market. In China, where very few houses are built from wood, most unpruned radiata is used for packaging, plywood and concrete boxing.
“Prices for quality pruned logs are higher than they have been for years, whereas prices for the unpruned logs that make up the bulk – about 80 per cent – of the crop are back about 15 per cent on the market peak in 2010,” Mr Rhodes says.
“For a range of reasons, some of them temporary, world markets are awash with unpruned softwood logs and this has put a dampener on the market. In contrast, Chinese importers wanting appearance grade logs have few supply options.”
Top grade pruned logs, debarked and treated to prevent sapstain, are now priced at around $US150 FOB/jasm3 (per cubic metre loaded on the ship), about $50 more than equivalent unpruned logs. But even this premium is marginal for the forest owner, who has to carry the cost of pruning forward more than 20 years until harvest.
However, this may change. There are now large areas of plantation coming forward for harvest where little of the crop has been pruned.
If the baby boom that has been predicted for the year of the dragon eventuates, the demand for cots made from fashionable New Zealand pine may well make some forest owners rue a decision that seemed sensible 20 years ago when margins for pruned logs were small.
“However this does not mean that prices for unpruned logs are delinked from the rest of the market. If prices get too high, Chinese manufacturers have the option of buying sawn lumber from New Zealand or Chile. Alternatively they can import logs and lumber from Europe.”
The year of the dragon runs until 9 February 2013.
For more information, please ring David Rhodes, Tel 0274 955 525