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Timber industry export losses of $70 million during the past four months and an almost 50% downturn in the domestic house building market has left the sector "absolutely hammered," according to the New Zealand Timber Industry Federation.
Federation chief executive Brent Coffey said virtually every significant market was "going backwards" and the "bread and butter" local house-building market was operating at "barely half traditional levels".
"Once stellar Asian markets, such as China, are retrenching with falling sales and prices," Mr Coffey said in the federation's November newsletter.
New Zealand's much vaunted imminent "wall of wood", which was to create thousands of jobs in downstream processing, was instead going into feeding Asian industries.
"These are by far the worst set of timber industry statistics we have ever reviewed" Mr Coffey said. "The timber industry is being absolutely hammered."
Mr Coffey acknowledged $20 billion in damage to leaky homes was a "confidence shaker" to homeowners, and was further compounded by Christchurch's earthquakes which left people "uneasy about having life savings tied up in a house and the land underneath".
However, the biggest confidence shaker Mr Coffey claimed, was the "attack" by both National and Labour on house construction as an investment option.
The political parties want to move savings from going into housing towards managed funds and retirement schemes, he said.
"If this is not enough they [Labour] are talking about capital gains taxes on property," Mr Coffey said.
For the four months to September, there was a "massive" 21% downturn in lumber exports from New Zealand, which equated to $70 million, Coffey said.
For August alone that export market overall was down 27%, with Australia "particularly disappointing" down 11% for the month, or 14.2 % for the quarter.
"Almost all the other countries, especially Asia, are negative," Mr Coffey said.
Eleven of 18 export destination countries for lumber were in negative territory, for the quarter to September, with exports down from $313.9 million to $264 million, an almost $50 million decline.
Of the five log export destinations - Japan, Korea, China-Hong Kong, Taiwan and India - export receipts were up 28%, from $397.7 million for the corresponding period a year ago.
In September, the Federation predicted New Zealand's forestry sector faced bleak times again as China was processing more sawn timber for itself at unbeatable production rates, while other log exporting countries elbowed New Zealand trade aside.
A downturn in Russian log exports to China had for a time boosted New Zealand's volumes, but New Zealand logs were since then being undercut in price by those from North American because of the sheer volume coming out of some of the world's largest sawmills.
In the four months to June, China increased its purchase of New Zealand logs by almost 60%, but reduced sawn timber imports by almost 20%. While China paid 21% more for the logs, it paid 19% less for New Zealand sawn timber.