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  • New Zealand timber value soar as China demand grows

    2011 - 07.12

    Demand from China has not only pushed up demand from large forest product exporters like Brazil. According to new figures from the country’s Ministry of Agriculture and Forestry (MAF), demand from the world’s most populous country has significantly driven up the value of forestry exports from New Zealand. new zealand forestry

    The value of the forestry exports from New Zealand in the year to the end of March rose by NZ$ 800 million to NZ$ 4.4 billion. This rise was mainly driven by the increase in log exports to China, which is eager to buy up raw materials for building to allow its economy to continue to grow.

    In the first quarter of 2011 alone, some 1.7 million cubic meters of logs were exported from New Zealand to China – up 44.5 per cent on the same month in 2010. India is another market that is importing logs in huge quantities to feed growing demand for construction. In the first quarter of 2011, exports to India increased by a huge 157 per cent to 0.4 million cubic meters of timber.

    Although the greater demand from emerging economies has been welcomed, the rising prices are also being felt domestically and local construction industry slow-downs are adding to the pressure on the country’s producers.

    “As a result, some mills have closed or down-scaled since the December 2010 quarter, and some remaining saw millers have reported to MAF that they are questioning their future viability in the industry,” explained Andrew Doube of the MAF.

    Although some workers have been laid off as a result of sawmills closing, there is some positivity that local demand will increase when the rebuilding after the Christchurch earthquake really gets going. Doube explained, “There is a general expectation that there will be increased demand for processed wood products once the post-quake rebuild begins.”

    Demand for Brazilian timber products are also on the up thanks to increasing demand from emerging economies in Asia, including China, India and Japan following its own devastating earthquake in March. As a result, forestry investment firms such as Greenwood Management are likely to see plenty of demand for their mature stocks.

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