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17 December 2003
Shipping costs and a rising New Zealand dollar point to a gloomy outlook in
the short to medium term for forestry exports, according to the latest MAF
Situation and Outlook for New Zealand Agriculture and Forestry report.
But the situation should improve towards the end of the period covered by the
2003 SONZAF report, which goes out to 2007.
The report says the average price of logs fell by five percent in New Zealand
dollar terms in the March 2003 year although prices in terms of US currency rose
13 percent. This demonstrates the effect that the strong New Zealand dollar has
had on log exports.
However, due to increased export volumes in the March 2003 year, the total
value of log exports was up by four percent on the previous year.
Lumber, or sawn timber, export volumes for the 2002/03 year grew by a healthy
The short-term outlook for export volumes of logs and lumber is, however, not
The log export sector is in the midst of a harsh market downturn, with sales
plummeting. Also a number of sawmills are in financial difficulties. In both
cases market difficulties are exacerbated on by a combination of the high New
Zealand dollar, high energy prices and rising shipping costs.
Restructuring and reasonable market demand should see the situation improve
through the middle of the outlook period.
Exports of wood products such as pulp and paper products, laminated veneer,
lumber and mouldings also face challenges over the next three years.
The depressed world economy has constrained growth in international demand
for paper-based packaging and printing materials, depressing the demand for
pulp. A static domestic market and limited production capacity points to limited
increases in production over the next five years.
Likewise, future production increases in paper and paperboard are expected to
be only incremental. Export volume growth is expected grow by only by small
year-on-year increases because of worldwide over-capacity. Until there is a
genuine lift in the world economy, prices in US-dollar terms are unlikely to
return to their highs of the mid-1990s.
Over the next three to four years, the prices of wood-based panels are
expected to increase steadily by around two percent due to continuing demand in
Japan, China and Australia. However the impact of the New Zealand-US exchange
rates indicate that prices in New Zealand dollars may be five to six percent
lower this year compared to last year.
The SONZAF report says continued growth in demand for laminated products has
been at the expense of solid structural lumber, due to changes in building
regulations in Japan. The report says it is likely this will continue and
therefore offer opportunities, partially offset by losses, for New Zealand,
which is a supplier of both types of product. However it says New Zealand
laminated wood exporters also face aggressive competition from companies in
Sweden, Germany, Austria and Finland.
For more information contact:
John Eyre, MAF Senior Policy Analyst, Tel.
04-498-9827 or go to website http://www.maf.govt.nz/mafnet/rural-nz/statistics-and-forecasts/sonzaf/index.htm