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Monthly Reports August

August 2022.

Whilst the China key market indicators remain flat to weak, export log prices increased at wharf gate NZ in August, primarily on the back of reduced shipping rates. Combined with a small increase in CFR rates (the selling price), the net back increase across most NZ ports was in a range NZ$12 – $14 per cubic metre, with the range mostly impacted by the number of Port calls and the negotiation skills of the ship charterer.

This then has the market indicator A grade level back up into the 75 percentile of the last 3 years, on an at NZ wharf gate basis. As a consequence, there has been a gradual return to work for many Loggers and Trucking Co’s, although overall production across Godzone has been hampered by bad weather.

Across our domestic scene, demand remains strong with elevated sales and volumes pumping out the gate, even at increased lumber prices on the back of inflationary clawbacks.

The recent announcement of the NZ Forest Industry Transformation Plan has been greeted warmly by many sawmill owners spoken to. Dubbed as “Creating a high-value and resilient forestry and wood processing sector to underpin our low emissions future”, the plan has just gone to print after initial consultation. I will reserve opinion until I have had an opportunity to review it.

Shipping continues to dominate both conversations and reality in terms of the net impact back at the NZ Forest owner’s gate. That impact is across both log and lumber export segments with bulk freight hire rates often moving in symbiosis with container hire rates.

In the dry bulk Handy Class segment, August sailings were down about US$3 – 6 per cubic metre from July fixtures, depending on who you talk to. The smoking mirrors and sentiment driven ship charter world has become even more complex to understand with trend and index movements not always reflective of what happens when the pen hits the paper.

Handysize vessels that bring bulk trade commodities to NZ and logs back to China are smaller vessels in the dry bulk trade. They come with their own onboard cranes and a carrying capacity generally between 10,000 and 40,000 deadweight tonnes. The majority that come to NZ are 4 or 5-hold vessels, typically carry 30,000 to 40,000 cubic metres of logs, including below and above deck.

The international Baltic Handy Size Index is typically used to guide fixture rates although there can be a lag effect with the Index typically running a month behind reality. Right now, the Index is trending down, reflecting a last 3-month trend line. Ultimately, is essentially reflective of supply and demand.

September Handy Class fixtures are expected to continue to slide, although as at the last week of August, owners have suddenly become bullish. There is no readily apparent reason other than they know NZ Charterers will be ringing them shortly for September/October fixtures.

The forest Industry covering the Canterbury West Coast region recently celebrated those that excel in what they do at the Wood Council Awards Gala dinner held at the Wigram Museum. The Wood Council is supported by the majority of the region’s companies from Tree Nurseries to Box stores. It aims to promote, encourage and coordinate the sustainable economic development of plantation forestry and the wood products industry in Canterbury and the West Coast.

Laurie Forestry were delighted to be a gold sponsor for the event, including supporting the Contractor of the year Award. My citation included the region being blessed with a stable of professional harvest contractors of high quality and professionalism. The winners of the Award should be very chuffed they were selected as standouts in a crowd of such excellence.

Heartiest congratulations to Michael and Helen May and Tracey and Avrill Burrows of Cable Logging Geraldine limited, a company engaged and nominated by Port Blakely Limited. A tremendous accolade and well deserved.

And the continuing good news is if ship owners behave themselves, we should see NZ Wharf gate prices move back into the top 90 percentile of the market in September and that will be well received by many who have been struggling to keep their bank managers happy lately.

As always People, please remember the thoroughly important message, “It remains, as always, fundamentally important, no matter the challenges, the only way forward for climate, country and the planet, is to get out there and plant more trees”!

Allan Laurie.
Laurie Forestry.