Exports fall and timber industry 'hammered'

A sea of logs at the Port of Gisborne. Photo / Alan Gibson

Timber industry export losses of $70 million during the past four months and an almost 50 per cent downturn in the domestic house building market has left the sector "absolutely hammered", according to the Timber Industry Federation.

Federation chief executive Brent Coffey said virtually every significant market was "going backwards" and the "bread and butter" local house-building market was operating at "barely half traditional levels".

"Once-stellar Asian markets, such as China, are retrenching with falling sales and prices," Coffey said in the federation's November newsletter.

The country's much-vaunted imminent "wall of wood", which was to create thousands of jobs in downstream processing, was instead going into feeding Asian industries.

"These are by far the worst set of timber industry statistics we have ever reviewed," Coffey said. "The timber industry is being absolutely hammered."

Coffey said $20 billion in damage to leaky homes was a "confidence shaker" to homeowners, and was further compounded by Christchurch's earthquakes which left people "uneasy about having life savings tied up in a house and the land underneath". However, the biggest confidence shaker Coffey claimed, was the "attack" by National and Labour on house construction as an investment option.

The political parties want to move savings from going into housing towards managed funds and retirement schemes, he said.

"If this is not enough they [Labour] are talking about capital gains taxes on property," Mr Coffey said.

For the four months to September, there was a "massive" 21 per cent downturn in lumber exports, which equated to $70 million, Coffey said.

For August alone that export market overall was down 27 per cent, with Australia "particularly disappointing" down 11 per cent for the month, or 14.2 per cent for the quarter. "Almost all the other countries, especially Asia, are negative," Coffey said.

Eleven of 18 export destination countries for lumber were in negative territory, for the quarter to September, with exports down from $313.9 million to $264 million, an almost $50 million decline.

Of the five log export destinations - Japan, Korea, China-Hong Kong, Taiwan and India - export receipts were up 28 per cent, from $397.7 million for the corresponding period a year ago.

In September, the Federation predicted New Zealand's forestry sector faced bleak times again as China was processing more sawn timber for itself at unbeatable production rates, while other log exporting countries elbowed New Zealand trade aside.

A downturn in Russian log exports to China had for a time boosted New Zealand's volumes, but New Zealand logs were since then being undercut in price by those from North America because of the sheer volume coming out of some of the world's largest sawmills.

In the four months to June, China increased its purchase of New Zealand logs by almost 60 per cent, but reduced sawn timber imports by almost 20 per cent.

While China paid 21 per cent more for the logs, it paid 19 per cent less for New Zealand sawn timber.

- OTAGO DAILY TIMES