The New Zealand log market
The New Zealand log market is primarily made up of radiata pine. Our harvest has increased over the last decade, leading to increased log exports. Find out about current trends.
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Annual log harvest
Since 2010, our national annual log harvest has risen by over 75% from around 20 million cubic metres to 36 million cubic metres per year. The harvest species is roughly split:
- 90% radiata pine
- 5% douglas fir
- 5% other exotic species.
Forest trends
The increase in harvest volumes over the last decade is a result of a planting boom during the 1990s. Harvest volumes are expected to decrease to around 25 million metres cubed in the 2030s as these trees are harvested and replanted.
Most of the growth in the national harvest comes from small woodlot owners (someone who owns less than 1,000 hectares of forest land) who planted their forests during the 1990s planting boom.
Small woodlots
Harvesting of small woodlots has increased from about 10% in the early 2000s to around 40% of the annual harvest. These levels will remain roughly stable for a decade or more.
Small woodlot owners often only have trees of the same age. This can create challenges for domestic processors who need a stable and continuous supply of logs, as small woodlot owners have more flexibility to bring forward or delay harvests to optimise returns.
Small woodlots represent 93% of forest owners. The remaining 7% account for over 70% of the forest estate.
Large forest owners
In contrast to small woodlot owners, forestry companies have mixed age forest portfolios that create a more continuous supply of logs. Most forestry companies split their harvest between the domestic and export markets.
Split across domestic and export
Strong international demand for radiata pine logs has seen most of the increased volume of logs harvested exported. Over the same period the volume of logs processed domestically has remained constant.
Domestic log grades
There are 3 broad types of domestic log grades – pruned logs, structural logs and pulp logs.
A single tree can produce different log grades:
- The top one-third of the tree produces pulp or industrial logs.
- The middle one-third of the tree produces structural or industrial logs.
- The bottom one-third of the tree is used for structural and appearance logs.
Pruned logs
Pruned logs are processed into appearance grade timber products because of their clean, knot free appearance. These products include wood for joinery, cabinetry and weatherboards.
Structural logs
Structural logs are predominately milled into framing timber for residential and commercial housing. They have a range of different qualities.
Pulp logs
Pulp logs are processed into a range of products including cardboard and paper, and reconstituted wood products like Medium Density Fibreboard (MDF). Pulp and paper processors also buy residues from other sawmills.
Domestic log grade statistics for 2019
In the year ending Dec 2019, 38% of logs were processed domestically. Of this, 65% is made up of structural and pruned logs (known as sawlogs). These can be turned into timber or plywood. The remaining 35% was pulp logs.
Domestic grades versus export grades
It’s difficult to compare domestic grades to export grades because each market has:
- its own way of grading logs
- different needs, so there is often no exact equivalency.
Two differences between logs processed domestically and exported is that:
- pruned logs make up a much smaller share of our export logs
- low grade logs (industrial grade logs) make up a significant share of exported logs due to strong demand from China.
Industrial grade logs are smaller diameter unpruned logs that are often unsuitable for structural uses.
Domestic log price comparison
Pruned logs fetch a premium relative to unpruned logs because of their appearance quality. The price difference between the 2 has been declining since the early 2000s due to:
- an increase in demand for unpruned logs closing the price gap
- a number of products which could only be made using pruned logs that can now also be made by structural logs through techniques like finger jointing.
This along with strong demand from China for industrial logs has seen pruning numbers decline in recent years.
Domestic log prices in February 2021
| Log type | Per tonne (approximately) |
|---|---|
| Pruned | $175 to $195 |
| Structural | $118 to $132 |
| Pulp and paper | $46 |
Factors influencing domestic and export log prices
The domestic log price is strongly linked to the export log price, particularly in areas close to ports. Global log prices are highly volatile and are affected by a range of factors including:
- global construction levels
- economic growth forecasts
- exchange rates
- shipping costs
- export restrictions
- pest incursions
- trade agreements
- trade barriers.
Over the last decade, Canada has experienced a significant pine beetle outbreak which has seen it increase harvest volumes to salvage timber. Europe is currently experiencing a similar pine beetle outbreak.
As of early 2021, China banned the import of logs from Australia. This was due to biosecurity concerns and trade disputes which has seen our log prices rise.
Log price trends
Over the last 10 years log prices have remained buoyant. There has generally been an upward trend for both the domestic and international markets. This has seen the value of our log exports increase, while the volume of logs processed domestically has remained stable over the last decade.