Westpac in New Zealand has released an economic bulletin titled Forestry: Covid impact and outlook – Re-enter the dragon saying the forestry sector battled a major storm over the first half of 2020. The impact of the COVID outbreak on forestry was as sharp as it was immediate. Source: Timberbiz
Logs were turned away at Chinese ports or at best delayed and stockpiled on wharfs.Export log prices, already relatively soft, slumped further, with export incomes plunging, particularly over April.
The next hammer blow came as the New Zealand Level 4 lockdown was imposed, during which forestry activity was classified as non-essential.
Suddenly logging activity came to a halt. Indeed, the COVID impact has dwarfed that of past pandemics such as SARS in 2002/03 and MERS in 2012/13. Even the Global Financial Crisis in 2008/09 had only muted impacts in comparison.
Downstream wood processing was similarly affected, with exports of sawn timber, panel products, and wood pulp, each recording large falls during the lockdown period. The only exception was paper and paperboard, presumably because of an increase in online shopping, which will have boosted demand for packaging materials.
Forestry contractors involved in harvesting activity and wood processors were among the first to feel the effects of the lockdown. Especially vulnerable were the many small operators that rely heavily on cash running through their books.
Some, that were already teetering on the edge before COVID, were forced to rejig their operations or close shop, resulting in jobs losses. Others tapped into the Government’s wage subsidy scheme to buy themselves some time and weather the lockdown storm.
Then the picture changed. Both locally and in key forestry export markets, the COVID outbreak was contained. Crucially, the local move down the alert levels meant logging could resume and the supply chain could re-open. Global demand also began to resurface, with key ports accepting delivery once again.
The entire report is available here:Forestry-Covid-Impact-July-2020-Westpac-NZ
