Lack of space in Chinese ports is bringing a virtual halt to New Zealand log exports to China, according to the New Zealand Forest Owners Association.
NZFOA president Peter Weir says precautions in China against coronavirus have resulted in almost no offtake of logs in China for processing, and exporters understand that the remaining log yard space at most ports near processing centres is quickly disappearing.
Exporters had hoped that business would return to normal after the extended Lunar New Year holiday finished in China two weeks ago, says Peter.
“That hasn’t happened. Many Chinese sawmills are yet to get back to work. New Zealand exporters have nowhere else to send the industrial grade logs they harvest.”
Peter says while NZ’s domestic sawmills usually take about 40 per cent of the harvest, sawmills supplying the NZ housing market will only buy stiffer and higher quality sawlogs or knot-free logs from pruned trees for joinery. “The upper logs from a pruned tree often grade out as industrial logs, and these logs are exported.”
In regions where there is no domestic sawmilling, many harvest contracting crews are being put on reduced hours or, worst case, stood down, says Peter. “Regrettably, many of our contractors have little alternative but to lay-off skilled workers.”
New Zealand log exports to China were worth $2.7 billion for the year to the end of December 2019.
During the last three months very large volumes of European spruce salvaged from forests under attack by insects have been shipped into log markets in China.
Peter says that this flood of salvaged logs is directly attributable to climate change with recent warm winters and longer summers.
“There would have been much less inventory pressure if these exports had not arrived in China, but the concern about coronavirus has happened at just the wrong time for NZ.”
Peter says the situation is fluid with different forest owners and management companies taking different approaches.
“NZFOA members are doing what we can to retain our skilled labour force by sending better logs to domestic sawmills to make up for the shortfall from farm woodlots where logging has already ceased.
“We continue to invest in the silvicultural work, including pruning, thinning and preparing recently-harvested land before replanting begins in May or June.
“Most members will continue building safe forest roads and landings to be harvest-ready when markets recover. But that may be some months.
“Many larger forest companies are assisting contractors with business management and financial advice.
“In Poverty Bay, we are delighted with the support we are receiving from local Federated Farmers who are looking for jobs to employ forest workers. Every few extra hours of income are most welcome.”
Peter says the NZFOA is working closely with Te Uru Rakau in trying to lessen the impact of the log supply situation.
“We are coordination with the Government seeing what we can do together. Neither of us can solve this situation, but working together as a partnership will lessen the impact.
“Our members are not looking for handouts, but we do want to work out equitable ways for working with the Government to assist the various harvesting crews. They are ones who will need the help.
“We are mindful too that a substantial reduction in harvesting is likely to have a major and rapid supply chain effect here in NZ, with a large dedicated workforce in trucking and port loading which is also going to feel the impact.”