In last month's column, I commented on the strength of the export log market with a degree of trepidation.
This was around the longevity of the current pricing levels in China (our primary market), as history has dictated, time and time again, that once A grade exceeds $145/Jas it's time to brace yourself for a good old-fashioned walloping.
Whenever export prices get to these levels there is plenty of talk about the drivers of price being "different this time" and "this is the new medium-term level". Within a month we're generally crying into our soup and dialling back production as prices plummet faster than John Banks' radio career.
So, here we are with A grade in the mid $140's, Chinese in-market softwood inventories at the lowest level since late 2016 (1.2Mm3 less than this time last year), zero supply from Australia and a relatively high exchange rate.
Chinese Lunar Celebrations are currently starting and we have seen daily sales drop to around 60Km3 from 85Km3 in early January. It is expected that this useage will drop to miniscule volumes for February before returning with some gusto in March following the almost month long holiday. Inventory will build through this period as we keep the foot on production throttle in NZ. However, as we are heading into the Chinese holiday period at a very low inventory position, we don't expect to see any negative price pressure in the short term.