New Zealand’s log export outlook uncertain due to high shipping prices and supply chain disruptions

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New Zealand’s log export outlook uncertain due to high shipping prices and supply chain disruptions
New Zealand log exports are forecast to drop by 12 percent to $3.4 billion for the year to 30 June 2022. Prices remain relatively high, but export volumes have decreased. Export volumes fell 12 percent in the nine months to 31 March 2022 compared with the same time last year, mostly due to heightened uncertainty in logistics, says New Zealand’s Ministry of Primary Industries (MPI). A substantial portion of the decrease was attributed to the roughly 40 percent of forests owned by NZ small-size growers who are not willing to risk the uncertain profits in export markets. Larger growers will continue to harvest regularly to supply their long-term customers. Under normal conditions, production ramps up in response to higher prices. However, in the current environment, production is being hampered by high shipping costs, putting downward pressure on demand and profits. Port congestion is contributing to the uncertainty and putting further pressure on profit margins as growers have to pay for delays, disincentivising harvest. Logistics issues are forecast to remain an issue until 2023, affecting production over this period. China’s lockdowns and the Russia-Ukraine conflict have increased logistics disruptions in recent months. More recently, China also has elevated log inventories at port as COVID-19 disrupts logs flowing out, decreasing its capacity to take New Zealand’s logs in. Construction in China has slowed due to high levels of debt among its main developers and stricter lending policies. This slowdown is now exacerbated by the country’s latest COVID-19 outbreak, further putting downward pressure…

New Zealand’s log export outlook uncertain due to high shipping prices and supply chain disruptions