Chinese growth drives leap in log values

Log exports to China for the March quarter rose 44.5 per cent on the figure for the previous year. File Photo / Mark Mitchell

Strong Chinese demand for logs has pushed the value of New Zealand's forestry exports to $4.4 billion for the year ending March 31 - up $800 million on the previous year.

Statistics released yesterday by the Ministry of Agriculture and Forestry showed log exports continued to be dominated by exports to China.

Andrew Doube, MAF's sector infrastructure acting manager, said this had been driven by the Asian superpower's strong economic growth and a reduction in availability of logs from Russia, China's traditional supplier.

China imported 1.7 million cu m of New Zealand logs in the March quarter, up 44.5 per cent on the same time the previous year.

Doube said India was also emerging as a major destination, with its demand now approaching that of Korea - New Zealand's second-largest log export market.

The volume exported to India in the March quarter was 0.4 million cu m, up 157 per cent on the same time the previous year.

Overall, the export of 3.1 million cu m of logs in the quarter accounted for half the estimated harvest. It was the first time that had happened in the 25 years the statistics had been collected, Doube said.

However, the international demand had resulted in higher domestic prices, putting pressure on New Zealand wood processors who were also facing less demand from reduced construction activity both domestically and in the United States.

Some mills had closed or down-scaled since the December 2010 quarter, and some remaining sawmillers were questioning their future viability in the industry, he said.

Forestry had been "in the doldrums" for most of the past decade but, during the past 18 months, a combination of carbon sales and higher log prices had really lifted the industry, said City Forests chief executive Grant Dodson, who is also chairman of the Southern Wood Council.

The February 22 earthquake in Christchurch had no immediate effect on total sawn timber production figures through the first quarter of the year. There would be a building boom in the city in 2012-2013 which would "soak up a lot of timber" which would be good for domestic mills, Dodson said.

The Chinese and Indian markets were interested in buying the logs and cutting them up themselves, as opposed to buying sawn timber.

- OTAGO DAILY TIMES