The suspension of operations four months ago is not expected to have any significant financial effect on City Forest's full-year result, and the plant's two staff are working with a neighbouring contractor.
A five-month-old 25,000-tonne wood-chip pile on Port Chalmers wharves is likely to be exported to Japan next month, depending on vessel availability. A secondary stockpile has been started by another, separate supplier at a site in Burnside.
There has not been a wood-chip vessel visit to Port Chalmers since April. Usually, up to six visit each year.
South Wood Ltd spokesman Graeme Manley said yesterday plans for a vessel visit this month had been moved to October.
The chips had been stockpiling because Japan was holding a high inventory of chips and importing less, plus vessel waiting times to unload in Japan had been up to four weeks, Mr Manley said.
City Forests has a 50% stake in the joint venture Otago Chipmill, with annual production always variable due to market factors ranging between 10,000 and 60,000 tonnes a year, City Forests chief executive Grant Dodson said.
"The world softwood chip market is currently oversupplied and as a result there is a global build-up of wood-chip stock," he said.
Operations at the 20-year-old plant had had to be suspended in the past and this time the plant could be closed for a total of seven months, until December or January, he said.
In response to the oversupply, Mr Dodson said operations had been temporarily suspended at Otago Chipmill and the business was set up to accommodate this variability.
"Otago Chipmill is fortunate to have a flexible arrangement with our operating contractor the Young Brothers, who also have their own post-and-pole business to operate," he said.
City Forests was a major supplier of logs to Otago Chipmill, when market conditions were favourable, and usually produced about 15,000 to 25,000 tonnes annually, he said.
"We are selling our pulpwood to Dongwah MDF in Southland and to Wood Energy New Zealand as bio-energy feedstock for local use.
"There is some build-up of bio-energy logs in the forest, so they can dry before use in local boilers," Mr Dodson said.
While the mounting wood-chip pile at Port Chalmers has attracted public attention, the estimated 25,000 tonnes is not the largest pile on record as the footprint area available for wood chips is smaller than in recent years, Port Otago has said.
The exported chips are used to produce various grades of pulp for manufacturing paper.
Mr Manley said the rising Japanese inventory had not had a detrimental effect on chip prices, which were "reasonable and had not changed significantly".
However, he predicted the wood-chip markets would remain "flat" for the rest of the year.
