Costs fall but timber trade edgy

Forest product exporters have seen a marked improvement in markets but are being conservative given the international uncertainty.

Wenita Forest Products chief executive Rodger Hancock said the industry was enjoying a lower exchange rate and shipping rates that were close to $US30 a cu m lower than they were earlier this year.

Market stability varied depending on the country, but the big concern was the impact of the credit crunch on buyer confidence and he was hearing an increasing number of stories about customers unable to secure credit.

"The whole global credit crunch is impacting on everybody. It is all very well to have the exchange rate and freight costs in our favour, but at the end of the day you have got to have customers able to open letters of credit to have a market," Mr Hancock said.

The Korean economy, a key round-log market, was described as "fragile", while the United States timber market was tough but Asia was holding up.

Exporters were being helped by an export tariff programme being implemented by the Russian Government on log exports.

China was a significant market for Russian logs but Mr Hancock said a 25% tariff imposed in April would rise to 80% from January 1, potentially forcing Chinese customers to look elsewhere for logs.

Given the uncertainty, Mr Hancock said he was being conservative with the level of log harvesting.



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