Log export standstill

Press, 21 October 1980, Page 20

Log export standstill

By

BRUCE ROSCOE

in Tokyo

New Zealand log and sawn timben exports to Japan remain at a complete standstill as low-priced Canadian, Chilean, and United States timber continues to flood the Japanese market. The suspension of timber exports to Japan, which is New Zealand’s largest market taking 85 per cent of New Zealand’s logs and 45 per cent of New Zealand’s sawn timber, will result in losses of about $4.5 million per month until exporters and buyers reach agreement on new conditions. Exports ground to a halt this month after the New Zealand Timber Importing Association, which comprises the four main Japanese purchasers, failed to reach agreement in negotiations for an extension of the six-month contract with the New Zealand Forest Service and New Zealand Forest Products. The sudden downturn in the Japanese market appears to be beyond New Zealand’s control. Most agree it has resulted from Canada diverting "abnormal quantities” of the timber it usually exports to the United States to. Japan because of the building recession in the United States. United States timber exports to Japan have also increased for the same reason.

Moreover, Japanese log negotiators have been driving a hard bargain, seeking as much as a 30 per cent reduction in prices, according to one source. Industry sources say that the sawn' timber market situation in Japan has “turned very sour” for New Zealand. One New Zealand company is believed to be suspending shipments for several months while another is having to test third country markets. , Representatives of Fletcher Forests Ltd, who visited Japan late last month, did not even enter into any negotiations as their ■ Japanese buyers said they were in no hurry to contract for imports, having already three months’ stock of New’ Zealand timber.

Fletcher Forests may, however, attempt to restart negotiations with Japanese timber buyers at the New Zealand-Japan Businessmen’s Conference, which begins on October 22.

Japanese industry sources affirm that no decision has been made within the industry to suspend all shipments but. caution that timber import quantities in new contracts are likely to be “drastically reduced” for reasons partly relating to the assignment of ships. New Zealand industry sources in Tokyo see the current situation as temporary, pointing out that even though New Zealand supplies Japan with less than three per cent of her logs and sawn timber, Japan traditionally has preferred to import from as many different sources as possible. Also, the timber market is believed to be be-

coming buoj’ant again as stocks in late July and August showed signs of decreasing. Whereas negotiations would not normally take place until next March, specially arranged sessions could begin in December. While the possibility looms that no New Zealand timber may be exported to Japan for the next six months, there is still interest in New Zealand among Japanese timber concerns who are looking for alternative suppliers. A group of presidents and senior executives from 28 laminated wood manufacturers, who have been hit by rising prices for timber from South-East Asia, are scheduled to begin a tour of New Zealand at the beginning of November to investigate buying possibilities.