NZ exporters’ future remains shaky

18 April 2014

New Zealand’s timber industry, which has closed more than 40 sawmills in the past decade, is likely to face more pain as a result of lower-cost Chinese mills, rising competition and a strong kiwi dollar.

Mills supplying the domestic market are benefiting from an improving housebuilding market but, for exporters, the outlook remains shaky, according to forestry consultant DANA.

China's expanding economy has driven a surge in the volume and price of New Zealand log exports but kiwi mills haven't been able to compete with lower-cost Chinese mills that saw logs for temporary construction timber.

New Zealand is also facing competition from Chile to supply higher-value kiln-dried wood for furniture.

"The industry has been affected by high exchange rates and very competitive export price trends in recent years, and so has not been able to add value to its lumber exports this decade," DANA said in its 2014 NZ Forest Products Industry Review.

"This is an alarming trend and doesn't bode well for the general economic survival of much of the New Zealand sawmilling industry, unless this trend is reversed."