Log price drop 'helps NZ market'

A drop in export log prices has the potential to have a positive impact on the domestic log market, a Marlborough forest manager says.

Robinson Forest Management director Aaron Robinson said the drop in export log prices from a 20 year high had the potential to have some logging contractors without work for a few months.

The 20 per cent drop in prices over the past two months came after it became harder to get credit in China, resulting in a reduced housing demand.

The price for New Zealand radiata pine logs delivered to China had fallen from US$162 (NZ$187) cubic metre for A grade logs, to about US$140.

Robinson said forests that were less economical to harvest, like those in the Marlborough Sounds, were likely to be put on the backburner until export prices rose again. "It won't be feasible [to harvest those plots] they have a lot higher costs, with barging and double handling and the revenue isn't going to be there at the end."

As a result, logging contractors had the potential to be out of work for a few months, Robinson said.

"In saying that, not all the logs that are harvested are exported, we try and put what we can into domestic saw mills," he said.

Forestry companies would now probably focus on forests with domestic quality logs, which were in high demand for the Christchurch rebuild, and construction in Auckland, Robinson said.

"Some good quality forests that are well managed and mature, around 28-30 years old can have around 80 per cent domestic wood.

"It's always good insurance to grow a forest that age and have it for these situations."

New Zealand Timber Industry Federation director Kevin Hing said the sawmilling industry hoped to see a greater supply of logs for domestic purposes as a result of the drop in log exports.

"[Sawmillers] will now be able to get more certainty in the supply [of domestic logs] . . . which is good, especially when we have a good domestic market."

Robinson said the situation for log exporters would improve, but it was difficult to know when.

"It's very cyclical, the stocks of export logs have got up quite high in China and China has had a slow down in building activity largely to do with credit and that [downturn] could be quite short."

The Marlborough Express