Forest Products Industry

Furniture and wood-based articles placed on the EU market will have to meet a formaldehyde emission limit of 0.062 mg/m³ after 6 August 2026 under Commission Regulation (EU) 2023/1464. Source: Fordaq The regulation amends Annex XVII of REACH by adding Entry 77 for formaldehyde and formaldehyde-releasing substances. Under the new entry, articles may not be placed on the EU market after 6 August 2026 if, under the specified test conditions, the concentration of formaldehyde released from those articles exceeds 0.062 mg/m³ for furniture and wood-based articles. For articles other than furniture and wood-based articles, the limit is 0.080 mg/m³. The European Commission states that formaldehyde-based resins are used in the production of a wide variety of articles and that their primary use is in wood-based panels, where they act as a bonding agent for wood particles. The regulation also refers to other wood-based products, including furniture and flooring. In the regulation, the Commission says wood-based panels, articles made of wood-based panels or other wood-based articles, and furniture containing wood or other materials are among the main sources of formaldehyde emissions in indoor air where formaldehyde other than naturally occurring formaldehyde is used during production. Appendix 14 sets the reference conditions for measuring formaldehyde released into indoor air from covered articles. The regulation specifies test chamber conditions including a temperature of 23 ± 0.5°C, relative humidity of 45 ± 3%, a loading factor of 1 ± 0.02 m²/m³ and an air exchange rate of 1 ± 0.05 h-1. The steady-state concentration measured in the test chamber is used to verify compliance with the formaldehyde limit. The restriction does not apply to articles in which formaldehyde or formaldehyde-releasing substances are exclusively naturally present in the materials from which the articles are produced. The regulation also lists exemptions for articles exclusively for outdoor use, certain construction articles used outside the building shell and vapour barrier, articles exclusively for industrial or professional use unless they lead to exposure of the general public, food-contact articles, and second-hand articles.

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Metsa has opened a new packaging design studio in Milan, Italy to accelerate packaging development especially in its key European markets. The new studio enables earlier and closer collaboration between Metsä Board and its customers, allowing joint testing and refinement to bring real-world-ready packaging solutions faster. Source: Timberbiz Packaging is no longer just about protection and logistics. Brands are under increasing pressure to reduce material use, replace fossil-based materials, meet tightening regulations and still deliver strong shelf impact. At the same time, expectations for speed have fundamentally changed: solutions must be developed faster, with greater certainty around performance, recyclability and compliance. Metsä Board is addressing this shift with this new design studio in Milan bringing together design, material expertise and data-driven insights. It enables customers to develop packaging solutions that are more efficient and fit to their requirements. “Milan offers a unique combination of a strong packaging ecosystem and a world-class design environment. Being there allows us to work more closely with our customers and strengthen collaboration across key European markets,” said Erja Hyrsky, SVP Commercial Operations. By combining AI-supported design, simulation possibilities and material expertise, solutions can be explored and tested much earlier in the process, reducing uncertainty, accelerating decision-making and shortening development cycles. “Our customers don’t just need new packaging ideas – they need solutions that are validated for actual use conditions, and they need them faster than ever. By combining design, materials and data, we can move from concept to validated solution much earlier, with greater confidence,” said Erja Hyrsky. The Milan studio is built for a new way of working. Instead of sequential development, design, materials and performance are advanced in parallel, making it possible to improve material efficiency while maintaining performance requirements. “Instead of developing solutions in isolation, we can test and refine them together, making sure they are ready for market introduction much earlier,” said Ilkka Harju, Packaging Services Director. “For brands in segments such as food, pharma and beauty, where packaging plays a critical role both functionally and commercially, this integrated approach is becoming essential.”

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The Forest Stewardship Council (FSC) has secured substantial EU LIFE funding for a €6.7 million project, including €4 million from the EU LIFE program, together with a broad range of project partners. Source: Timberbiz The FSC EU LIFE FIBRA project will explore more efficient and responsible use of fibre-based materials in Europe, building on the credibility and robustness of FSC’s certification system. It will look at how FSC can strengthen its existing recycling solutions, support potential circular business models such as reuse, repair, and take-back, examine how agricultural waste streams may play a role in the FSC system, and support companies and public buyers in making more responsible material choices. Building on FSC’s existing systems, standards and core mission of promoting responsible forest stewardship, the project will strengthen FSC’s role in a changing market. “As the way we use materials changes, FSC is evolving with it,” said Subhra Bhattacharjee, Director General of FSC. “This project will define our role in a future market; from the way materials are sourced to the way they are kept in circulation over time.” FSC has been championing forest regeneration for over 30 years and with the introduction of the FSC RECYCLED label 15 years ago FSC has been directly supporting recycling too. But recycling and renewable fibres aren’t enough. As demand for renewable materials grows across Europe, industries in packaging, construction, furniture, and other sectors are turning to forest-based fibres instead of fossil-based resources to cut carbon emissions and support climate objectives. However, relying solely on virgin forest resources is not a sustainable long-term solution. In parallel, companies are facing increasing regulatory requirements under EU sustainability legislation, including expectations around resource efficiency, circularity, and traceability. Thanks to the EU LIFE program, FSC can now scale its work on exploring solutions in a broad and structured way. The FSC EU LIFE FIBRA project FSC’s existing systems are designed for linear supply chains and do not adequately capture circular flows. The project will develop and pilot tools, guidance, and verification approaches for how to enable circularity in FSC and focus on exploring four key areas: potential circular business models in FSC Chain of Custody, including piloting a Circular Economy reporting module support increased uptake of recycled materials including market guidance and public procurement support explore how to potentially integrate alternative fibre sources such as agricultural residues from certified sources into FSC certified supply chains exploring potential approaches to cascading use of fibres supported by improved traceability and digital integration.   Together, these activities are designed to be fit for FSC’s existing certification system and provide practical, scalable support for companies adapting to evolving market and regulatory requirements. “This funding allows us to scale work that we have been laying the groundwork for over the past three years,” said Loa Dalgaard Worm, Global Lead of the FSC Circularity Hub. “It is important to me that we develop solutions that are fit for market demand and deliver real impact on the ground, without reinventing what FSC stands for: ensuring that the true value of forests for nature, the economy, and society is recognized.” The project will be implemented across eight European countries – Denmark, Sweden, Finland, Germany, Austria, the Netherlands, Italy, and France – with partners from industry, academia, and civil society. The project consortium behind the project consists of FSC International, FSC Denmark, FSC Sweden, FSC Finland, FSC Germany, FSC Netherlands, FSC Italy, FSC France, Aarhus University, University of Southern Denmark, Circle Economy, ECOS, World Business Council for Sustainable Development, and Ellen MacArthur Foundation.

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Australian Forest Products Association (AFPA) welcomed the new Private Members’ Bill, introduced by Federal Member for Lyne Alison Penfold MP, aimed at safeguarding the integrity and transparency of Australia’s carbon credit scheme. Source: Timberbiz AFPA acting CEO Richard Hyett said maintaining confidence and credibility in the ACCU scheme was essential for supporting investment in genuine emissions reduction projects and Australia’s transition to net zero. Ms Penfold’s proposed Carbon Credits (Carbon Farming Initiative) Amendment Bill 2026 proposes simple changes to improve transparency and integrity. This includes requiring the Federal Minister to only make an ACCU method if it’s fully consistent with the Objects of the Act, and if all relevant science and information to develop the method is released for public consultation to allow proper scrutiny. “Our ACCU scheme was designed to encourage real carbon abatement and high-integrity environmental outcomes, and it’s important the scheme remains focused on delivering genuine emissions reductions rather than being used to retrospectively fund government policy decisions,” Mr Hyett said. The proposal follows the NSW Government’s plan to develop an Improved Native Forest Management Method (INFM), which is currently being considered by the Commonwealth’s Emissions Reduction Assurance Committee. “In a recent submission, we have advocated for strong governance, transparency and safeguards across Australia’s carbon credit framework and have previously raised concerns about maintaining public confidence in the scheme,” Mr Hyett said. “Industry applauds and welcomes Ms Penfold’s Private Members’ Bill. Carbon credit methodologies must be evidence-based, transparent and support practical emissions reduction opportunities across productive industries, including sustainable forestry. It’s also essential to drive opportunities to expand the ACCU scheme’s participation through productive abatement methods including through the built environment. “We look forward to continuing to work with governments and industry stakeholders to ensure the ACCU scheme remains credible, supports regional Australia and delivers lasting environmental outcomes.”

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For New Zealand brokers placing forestry, logging and heavy plant risks, the most important test of specialist cover is not just what is on the slip. It is also the one that arrives months later, when a harvester burns out on a remote skid site or a crane topples on a steep East Coast forestry road and the client discovers what their policy is actually worth. Source: Insurance Business That distinction between capacity that looks strong at placement and capacity that performs at claim time is where specialist insurance either proves itself or quietly fails. The point has been sharpened across the Tasman by ARTes Specialty, a London-based managing general agent that has spent the past two years building a plant and equipment book in the Australian market. ARTes has launched three products into Australia – commercial loggers, plant and equipment, and, most recently, an integrated crane and rigging policy – all backed by Lloyd’s capacity, distributed locally and with claims handled in-country. Chris Thomas CEO of ARTes Specialty, has been unusually blunt about the limits of the paper itself. “Capacity on its own isn’t enough,” he said of the insurer’s Australian expansion. It is a striking admission from a business that sells capacity, but it speaks to a scepticism many brokers carry quietly. Two markets can offer near-identical security, wording and price, and none of that paperwork reveals whether anyone in the country understands a rigging contract, can inspect a damaged crawler crane, or can move a claim along before a contractor’s cash flow collapses. “Brokers and clients need confidence that there are experienced people on the ground who understand the local market, can respond quickly and will be there when a claim occurs,” Thomas said. For New Zealand, the argument lands squarely on forestry. Forestry and wood products remain among the country’s largest export earners, with revenue forecast to rise about 2% to NZ$6.3 billion in the year to 30 June 2026, according to the Ministry for Primary Industries forestry and wood-processing data. The sector supports a workforce of more than 42,000 people, on Treasury’s medium-term outlook for forestry exports, and runs on high-value, hard-to-replace machinery operating on unsealed, steep terrain in regions such as Gisborne, Northland and Southland – exactly the conditions where a single loss can sideline a contractor and where recovery is slow, costly and specialised. The gap between cover on paper and cover in practice is not hypothetical here. A North Island forestry business was left NZ$85,000 out of pocket after an insurer declined a Cyclone Gabrielle–related claim, in a dispute that turned on recovery wording, machinery access and a requirement for written consent before equipment was moved, as detailed in this recent ruling on a declined Cyclone Gabrielle forestry claim. For brokers with rural and forestry portfolios, the case is a reminder that the decisive questions are often buried in how a policy responds after the event, not in the headline limit. That points to a sharper set of questions at placement. Where does claims adjusting actually happen, and who does it? Does the person assessing the loss understand the equipment and the contractual obligations the client operates under? Can the insurer respond inside the client’s operating timeframe, or will a remote loss sit in a queue while the business haemorrhages money? New Zealand underwriters working in the space make much the same point. Matt Ziegler, head of pacific agencies at Underwriting Agencies of New Zealand (UANZ), whose Auckland-based firm covers cranes, excavators and forestry equipment, argues that service – not price – is now the differentiator in a softening market. “It’s 100% the service game at the moment,” he said when speaking to a panel of specialist underwriters on soft-market pressures, advising brokers to compete on claims handling, wording and value. The context matters because capacity itself is no longer scarce. Specialist underwriting agencies have proliferated in New Zealand, holding appetite for precisely the harder-to-place risks that mainstream insurers approach cautiously. As the New Zealand Underwriting Agencies Council set out at its recent Christchurch expo on the evolving risk market, the real challenge for brokers is no longer finding capacity but knowing where to look and, by extension, which providers will still be answering the phone when a complex loss lands. For a generalist risk, these distinctions may be marginal. For a logging contractor or crane operator whose entire business rests on a handful of high-value machines, they are the difference between a claim that gets paid and a claim that gets argued. As more overseas and Lloyd’s-backed capacity targets Australasia’s underserved specialist sectors, the temptation is to treat capacity as a commodity and place on price and security alone. The uncomfortable takeaway for brokers is the same on both sides of the Tasman: The time to test whether specialist capacity is real is before the loss, not after.

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Forest and Wood Products Australia (FWPA) is inviting applications for three Non-Executive Director positions, offering experienced leaders the opportunity to help guide one of Australia’s key industry research and development corporations. Source: Timberbiz The appointments form part of FWPA’s 2026 board renewal process, with successful candidates to join the board following the Annual General Meeting in November. FWPA is seeking individuals with strong governance capability and a passion for driving impact across the forest and wood products value chain. FWPA plays a unique role in bringing industry and government together to invest in research, development, and market growth that strengthens the competitiveness and sustainability of the sector. This is an opportunity to contribute at a national level to help shape strategic decisions that support innovation, productivity, and sustainable growth across Australia’s forest and wood products industry. As the industry’s research and development corporation, FWPA invests levy and matched government funding into programs that deliver practical outcomes for growers, processors, manufacturers and end-users. With annual revenue of approximately $21.5 million, FWPA supports initiatives spanning forestry, manufacturing, the built environment, market development, and the commercialisation of new technologies and products. Board positions offer a unique opportunity to: Contribute to an organisation delivering tangible, industry-wide impact Influence investment in research, innovation and market development Work at the intersection of industry, government and research Help shape the future use of sustainable, renewable wood products Collaborate with a highly engaged and skilled Board and executive team   FWPA is seeking candidates with expertise across areas such as: Forestry and natural resource management Wood products manufacturing Construction, design and the use of timber in the built environment Market dynamics, marketing and promotion Technology, innovation and RD&E commercialisation   Candidates with formal governance training (such as AICD or equivalent) are strongly encouraged to apply. The roles are remunerated, with an expected commitment of approximately 26 days per year, including board meetings, preparation and travel. Applications are being managed by Directors Australia. To apply, candidates must submit: A current resume (maximum three pages) A one-page cover letter addressing the selection criteria Applications close: midnight Sunday, 12 July 2026. For further information and to apply, visit: https://directorsaustralia.com.au/vacancies/ For confidential enquiries, contact Glee Mitchell, Directors Australia, on 0417 065 408 or via glee.mitchell@directorsaustralia.com

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Private forest owners across NSW may be banned from harvesting their trees by the NSW Government and Timber NSW is calling for Minister Penny Sharpe to outline what compensation for lost earnings will be available to private forestry owners across the entire State. Source: Timberbiz According to Timber NSW Chief Executive Maree McCaskill, the creation of the Great Koala National Park will have dire consequences for owners of private forests. Timber NSW is calling on Minister Penny Sharpe to clarify what compensation will be available to private forest owners in NSW who may be banned from harvesting their trees due to the creation of the Great Koala National Park. “The NSW Government will be paid by Australian taxpayers for shutting down the timber industry in northern NSW. That’s an undisputed fact and it all stems from the Improved Native Forest Management carbon credit scheme which is used to calculate payments under the Australian Carbon Credit Unit Scheme,” Ms McCaskill said. “Once again, the reality as it’s experienced by the people of NSW is completely different to the Minister’s words. “What the Federal Government says is that under the Australian Carbon Credit Unit Scheme, the Emissions Reduction Assurance Committee (whoever that is) must be satisfied that a method complies with the legislated Offsets Integrity Standards. “Those standards require that credited abatement reflects real, measurable, and additional emissions reductions. If leakage is underestimated, more ACCUs could be issued than the true global emissions benefit justifies, undermining the environmental integrity of the scheme.” Under the Australian Carbon Credit Unit Scheme, there can be no private native forest harvesting above a calculated baseline level, meaning private landowners would lose control of their own income while Australian taxpayers fund the NSW Government for enforcing these restrictions. According to Timber NSW what this really means is that there can be no private native forest harvesting in the State above its ‘baseline level’ which is calculated as the average monthly wood volume extracted from private native forests over the previous 4-year period. The Sydney Morning Herald has reported that; “There are also leakage clauses, providing penalties if logging of public forest increased elsewhere in the state on private or public land, or if there is an increase in imports of unsustainable timber”. Timber NSW argues that the carbon leakage figures used in the scheme are misleading, with independent research from the University of Queensland calculating timber harvest leakage at over 80%, far exceeding the maximum 40% discount permitted by the Commonwealth. What is not reported is that only a maximum of 40% of the carbon leakage (both domestic and international) can be discounted by the Commonwealth despite that figure being widely debunked and calculated by Dr Tyron Venn et al from UQ at more than 80% for timber harvest leakage, with most of the demand met by elevated-risk countries. According to Timber NSW this means that: communities in northern NSW are shut down Private forest landowners no longer control their own income Australian taxpayers are funding the NSW Government for forcing those changes The real impact of carbon emissions into the atmosphere is assumed away because it will happen overseas.   The forestry sector supports thousands of jobs across NSW and contributes significantly to regional economies through timber harvesting, transport, processing and manufacturing. It is an undisputed fact that sustainably managed state forests can and do deliver both conservation and economic outcomes. Timber NSW has warned that reduced domestic timber production will likely shift demand to overseas suppliers in elevated-risk countries, meaning the scheme effectively exports carbon emissions rather than reducing them globally.

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Timber Queensland has launched the Colin MacKenzie Award to strengthen timber design and construction capability. The Colin MacKenzie Award for Technical Excellence in Timber Application and Use is a new national initiative recognising outstanding technical achievement and leadership in the use of timber across Australia’s building and construction sectors. Source: Timberbiz The award was launched at the WoodSolutions event, Queensland Timber: Trajectory Award Winning Exemplars Showcasing the Way to Modern Construction, that brought together leaders from the forest and timber, engineering, architectural and construction industries. This initiative responds to widespread calls from industry to formally recognise Colin MacKenzie’s legacy following his passing on 24 March 2025 and to continue the work he championed in lifting capability, innovation and confidence in the use of timber across Australian construction. Widely regarded as “The Timber Expert”, the award reflects Mr MacKenzie’s lasting contribution to advancing timber as a high-performance, compliant and fit-for-purpose construction material across a diverse range of applications, from buildings to infrastructure and beyond. Timber Queensland CEO Mick Stephens said the award is intended to recognise those delivering real technical impact across the sector. “The award is intended for engineers, architects, designers, builders and researchers who are delivering real technical impact and helping to strengthen capability across the sector,” Mr Stephens said. “This is not limited to building projects it recognises the full breadth of timber innovation, including infrastructure, engineered solutions and other applications that demonstrate excellence in using or enabling the use of timber.” Mr Stephens said the award will focus strongly on outcomes that contribute to advancing industry knowledge and practice. “Judging will focus on technical merit, innovation, and the contribution a project or individual makes to improving knowledge, collaboration and sustainability in timber use,” Mr Stephens said. “It will also consider alignment with Colin’s vision for timber as a high-performance, compliant and fit-for-purpose construction material.” A national judging panel comprising respected leaders from across engineering, design and specification will assess entries, ensuring a strong emphasis on technical rigour and industry relevance. “We are honoured to have Professor Benoit Gilbert, Griffith University, Rob Mansell, National Specification Manager, Hyne Timber, Dr Andrew Magub, Principal, Architectus, Kim Harris, Technical Advisor, AKD and Matt Smith, Senior Technical Consultant, Timber Queensland join the inaugural selection process,” Mr Stephens said. By recognising leading projects and individuals, Timber Queensland said the initiative will help drive greater confidence in timber and support the continued development of capability across the industry. Mr Stephens said the recipient of the inaugural Colin MacKenzie Award will be honoured at the Queensland HIA Building Awards in Brisbane on 13 November 2026. “We gratefully acknowledge the support of the foundation partners, including Timber Queensland, to launch this award. The seed funding has enabled the national award to be offered annually for the next five years at which point the goodwill and delivery of the award can be reviewed going forward,” Mr Stephens said. The Queensland Building and Construction Commission (QBCC) is supporting the 2026 award as Presentation Sponsor, recognising Mr MacKenzie’s long-standing expertise, collaboration and trusted advice across a range of QBCC initiatives and the broader development sector over many years. The QBCC’s involvement with an award associated with technical excellence aligns with a commitment to promoting high standards, capability and integrity withing the building and construction industry. Further details about the application and judging process is available at https://www.timberqueensland.com.au/colin-mackenzie-award

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Australia’s first National Environmental Protection Agency was launched this week with stop-work-style powers, expanded audit powers and penalties of up to $16.5 million for serious corporate breaches. Native forestry is shielded for now, but that protection falls away in 12 months. Source: Timberbiz According to the Federal Government the National EPA, the first in Australia’s history, underpins the Albanese Government’s landmark environmental law reforms, which were passed in December last year. It is a key plank in the reforms’ promise to strengthen environmental protections and speed up the approval of critical housing, energy and minerals projects. The government says that the National EPA will be a modern and effective regulator that helps people understand Australia’s environmental laws and makes sure those laws are followed. These include the Environment Protection and Biodiversity Conservation Act 1999 (EPBC Act) and laws regulating sea dumping, ozone protection and synthetic greenhouse gas management, hazardous waste, product emissions standards, recycling and waste reduction and underwater cultural heritage. The role of the National EPA will include issuing permits and licences, environmental assessments and approvals, compliance and enforcement activities and the assurance, monitoring and auditing of the operation of accreditations, bilateral agreements and bioregional plans under the EPBC Act. Forest and Wood Communities Australia says the forestry sector now has just 12 months to prepare for the most significant expansion of federal environmental enforcement in a generation, after the National Environmental Protection Agency commenced on 1 July. “From 1 July, the clock started ticking for every native forestry business still operating under the Regional Forest Agreement framework,” said Steve Dobbyns BSc (Forestry), Chairman of Forest and Wood Communities Australia. “The sector has been told it has 12 months, but 12 months is not long when you are talking about federal approvals, accreditation, legal risk, wood supply contracts, contractors, mills and regional jobs. “Australian native forestry is not an environmental free-for-all. It is already managed through state forest practice systems, detailed environmental prescriptions, regeneration obligations, threatened species protections, audits and decades of scientific assessment under the RFAs. The danger is that Canberra builds a duplicate approval system that treats one of the most heavily regulated industries in the country as if none of that regulation exists.” Launched by Environment Minister Murray Watt and led by inaugural chief executive John Bradley PSM, the agency can now issue urgent environment protection orders where serious environmental harm is alleged, expand compliance audits and pursue breaches through the courts. The most serious penalties can reach $16.5 million per company and may be linked to the benefit gained from breaking the law. Native forestry conducted under a Regional Forest Agreement remains outside the full reach of these new arrangements until 1 July 2027. Operations outside an agreement have already required federal approval since December 2025, and current agreements allow approved harvesting to continue only until 30 June 2027, after which the exemption falls away. National Environmental Standards are now being developed and consulted on. Those standards will determine how forestry operations are judged under Commonwealth law and whether existing state systems are properly recognised or overridden by another layer of federal control. The five remaining Regional Forest Agreements across New South Wales, Tasmania and Western Australia have underpinned native forest management for a quarter of a century. They were built on regional scientific assessments, conservation reserves, sustainable yield modelling and state-based forest practice systems. When the exemption ends, thousands of regional workers and the communities built around them will face a federal regulator armed with stop-work powers for the first time. “This is the point where government must decide whether these reforms are about genuine environmental outcomes or whether they become another political weapon against Australian forestry,” Mr Dobbyns said. “You do not protect forests, jobs or the climate by strangling Australian production with duplicate green tape and then importing more timber from countries with weaker environmental standards. That is not conservation. That is environmental outsourcing.” Conservation groups are already pressing the new regulator to use its powers harder, including on land clearing and activities they claim threaten species such as the koala. It leaves the timber sector caught between a countdown clock and mounting political pressure to bring the full force of the new laws to bear the moment the exemption lifts. Forest and Wood Communities Australia says the federal government must guarantee that the new standards recognise the world-leading regulation Australian forestry already operates under, rather than treating sustainable domestic timber production as the problem. “The Commonwealth must not use these reforms to pretend that native forestry is unregulated, unscientific or unmanaged,” Mr Dobbyns said. “Our industry grows and regenerates forests, supplies renewable building materials, supports regional families and operates under rules that many imported products would never meet. “If the new system rewards activist pressure over evidence, the losers will be regional workers, local mills, Australian builders, housing affordability and the global environment.” The Australian Forest Products Association has warned that losing the RFA framework would bury native forestry in green tape and drive greater reliance on imported timber, including products from jurisdictions with weaker environmental oversight than Australia. Forest and Wood Communities Australia is calling on the federal government to work directly with forest scientists, state regulators, workers, contractors, processors and regional communities before the 1 July 2027 deadline. “Regional communities cannot be treated as collateral damage in another Canberra deal,” Mr Dobbyns said. “If the government is serious about timber security, housing supply and better environmental outcomes, it must back sustainable Australian forestry, not regulate it into uncertainty.”

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My prediction of impending drops in export log prices has regrettably come to pass.  Wharf gate sales dropped NZ$6-10 per m3 in June across NZ ports.  This was due to the combination of weaker selling prices and higher shipping costs combining into an imperfect storm. The better news is China market fundamentals remain ok with major further price drops unlikely to be in the mix. The price drop in June has seen a rapid slow-down in deliveries to NZ ports and that is what is needed to see any sort of recovery in July. I had a respondent to my last report suggest we need to “stop China playing with us”.  I want to put this one to bed as I have also often heard conspiracy theorists commenting negatively about the supposed China grand domination plan. I have been directly involved in the China export log market for 30+ years.  Let me assure you, there is no grand plan. The important point here is NZ is, by a significant margin, the largest supplier of softwood logs to China, currently hovering around 70% – 80% of all supplies. A sales price tempering impact is what China traders get for NZ logs sold into the China domestic market. They currently pay NZ exporters US$124 per m3 A grade shorts basis. The domestic wholesale price is US$120 per m3, slightly closer negative margin than I reported in May. In May/June another impact was a large NZ exporter trying to push prices above US$130 per m3 until vessels were sailing with some volume not contracted or LC’s issued against. This very silly history repeating tactic created nervousness amongst buyers who then folded their arms until the prices landed lower.  This is a “stupid is as stupid does” NZ plan, not a China plan! The domestic wholesale price in China is driven by manufacturing and sales – significantly furniture and moulding components to the US.  Current manufacturing stats across the Eastern seaboard suggest mild but not concerning weakness. If there is a grand plan it will be more about what pops up in Donald Trump’s head when he wakes up each morning. We see ample evidence of that being a pretty scary place.  The imposition of tariffs and propensity for war and the wide-ranging consequences obvious to all except Donald Trump, is what is controlling our collective destinies at present. There is no grand plan in China to gear prices for NZ logs. If we should shorten supply, prices will lift, but only in so much as China domestic pricing will allow. The China market is vast with multiple players operating in a highly dynamic market driven by domestic and export sales and the RMB/US$ exchange rate.  And like in NZ, each player is trying to play their own game whilst protecting their own profits, mostly without regard for others. The softwood log inventory across the Eastern seaboard is sitting around 2.54 million m3 round numbers, down 60,000 m3 in April which regarded as unchanged by the market. A reason for likely good recovery is daily consumption which continues to sit around 60,000, a pretty good utilisation for mid-summer conditions.  There is potential for July inventory to slip below 2mil m3.  That will also promulgate recovery. Exporters continue to turn eyes toward India with solid demand and elevated deliveries not appearing to scare the market in to price drops.  NZ Radiata pines logs are favoured by India sawmillers, being much better quality than other supply sources. There is no question the impending NZ/India Free Trade Agreement is elevating interest with shipments expected to increase as a consequence.  But this market is not large so it will not take much for NZ exporters to destroy their own price if too many want a slice of the action. Current CFR prices are in the late US$160’s per m3 compared to US$124 for the same grade in China.  But shipping costs to India are much higher at around US$70 compared to mid US$40’s for China fixtures.  This then nets back to a better price point currently for India trade. It is also great to see the NZ domestic sawmilling sector going gang buster – or at least a mild form thereof.   Long may that continue! Allan Laurie, Managing Director, Laurie Forestry.           

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