Export log prices up after big dip

New Zealand is the world's biggest supplier of softwood logs. Photo / APN

Export log prices have stabilised and are improving a little, despite conditions in the country's biggest market, China, remaining difficult.

Log prices - driven by demand from the People's Republic - rose steadily throughout last year, leading to increased supply coming from non-traditional sources, which in turn led to a buildup of inventory on Chinese wharves and a subsequent steep decline in prices in July.

Fewer homes are being sold in China because developers have been reluctant to lower prices beyond what they were just a few months ago.

The inventory of unsold new homes in 20 large cities jumped to an average of more than 23 months of sales in June, according to Shenzhen World Union Properties Consultancy data compiled by Bloomberg News.

In March, prices for China A-grade logs peaked at US$160 JAS (Japanese Agriculture Standard) a cubic metre ($190) but fell to around US$120 last month.

They have since levelled off and have improved a little to US$125 JAS a cubic metre, according to Agrifax agriculture analyst Ivan Luketina.

"House prices [in China] and residential sales have turned down a bit, but in terms of the log trade they are still consuming quite a lot off the ports," Luketina said.

"It seems like the bottom has been reached and for now we expect prices to edge back up slightly."

New Zealand is the world's biggest supplier of softwood logs.