Forest products & marketing

Pentarch Forest Products overview

Pentarch Forest Products exports wood products from five break bulk ports in Australia, one container export facility in the city of Melbourne and an export operation in Wellington New Zealand. Our export operations involve logs, lumber and woodchip exports with all marketing centralised through our head office in South Melbourne, Australia.

Countries we export to include China, Korea, India, Japan and the Middle East, with other countries serviced via our container export facility.

We maintain a policy of direct representation and supply chain control, managing all aspects of supply, from the grower to the importing customer.

We are a certified exporter of FSC and PEFC wood fibre and we strive to source all product exported from sustainably managed forests.

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Monthly market reports

Export Market View and Outlook June 2016 by Wally Vinaev

China, after a fairly solid first four months of investment growth (10.5%) in urban fixed asset investment, May produced results below the Jan – April average. The slower pace of growth in May reflected a deceleration in the real estate development indicators which hit a 13 month high in April.

May investment growth has mainly been coming from the state owned institutions (public sector) rather than from the private sector, suggesting there is still much work to do on the economic front to direct investment growth toward the private sector.

As a result it is proving difficult to get a read on the long term outlook for the construction industry which has a flow on effect on forest product consumption. Rural development in the interior is seen as the future growth area which will be supported by the central government as it works to decentralize economic investment away from the coast.

The challenge for Oceania & Pacific exporters is how to get their product to a market so far away from the coast or main river ports and remain competitive against Russian production coming from the North/North East.

June & July are again seasonally quiet months in terms of construction activity and slowing demand for wood products, with any improvements likely to come in the mid-3rd quarter.

India is still seeing good economic growth of around the 7.9% level mainly boosted by private sector spending. Housing index remains steady and has been in the 238 – 240 points band since July 2015. This supports what our man on the ground in India has consistently advised; real softwood log demand has remained unchanged this last year to be in the vicinity of an average of 125,000cbm per month.

India still remains a long way from being a challenge to China in terms of monthly volume consumed but it does watch activities in China closely when considering their price points for softwood log purchases. They are seeing a softening in China’s demand and prices and are expecting to take advantage of any price adjustments coming into June/July.

The Korean economy slowed in the 1st quarter of 2016 coming from a 3.1% annualised growth in 4th quarter of 2015 to 2.7% annualised growth in the 1st quarter of 2016. A sharp drop in domestic demand and a contraction in exports for the 17th consecutive month has Korean industries bracing for some tough times.

Global trade continues to slow and China’s improving industrial competitiveness poses a challenge to the government of Korea in terms of building business confidence and reducing the increasing high levels of corporate debt.

Softwood log imports from Oceania are still averaging about 220,000cbm per month and Pacific Northwest about 80,000cbm per month, which is pretty much about the level of sawmill stock holdings at end May. With poor market sentiment at present many sawmills will likely reduce their import averages and stock holdings to adjust to current domestic demand levels.