City Forests New Zealand is quietly confident booming export log prices will for a second year underpin a strong financial result, for the Dunedin City Council-owned company. Source: New Zealand Herald
Records may also be set for Otago Regional Council-owned Port Otago.
Chinese demand for logs during the past two years has proved a boon for forest owners, while sawmillers have had to compete for the pricier logs, putting a dampener on their profit margins.
It was understood in one month late last year 45 log ships departed New Zealand, most bound for Asian destinations.
China’s appetite for logs has increased since it stopped milling its own forests and Russia and Canada are supplying other markets at present.
City Forests does no sawmilling at all now and has 17,000ha of forest spread over about 21,000ha of land.
The company’s chief executive Grant Dodson said he expected to again sell about 45% of the company’s logs to domestic sawmillers around Otago and Southland, and the 55% balance was headed offshore.
“We’re committed to supporting domestic processing.
“Those mills effectively receive priority of log supply and generally take the best quality logs from our forests with the remainder being exported,” he said.
Mr Dodson was unable to give specific details on trading, as the company’s half-year report is due to go to the board for sign-off next month. However, he said the half-year log sales profits were “noticeably ahead of last year”.
He said in January 2016 a typical A grade saw log was sold for about NZ$100, NZ$115 in January last year and NZ$125 this month.
Port Otago commercial manager Peter Brown said that export log volumes were “tracking strongly” and predicted a record 1million cubic metres might go across the wharves, from both Dunedin and Port Chalmers this financial year.
