Carbon prices fall to just $7, down 65 | Rotorua News | Local News in Rotorua

Carbon prices have plummeted to just NZ$7 per New Zealand unit - 65 per cent down on the $19.90 of just a year ago.

One unit equates to the value of one tonne of carbon dioxide production and the price fell another $2.90 in the past month to $7.

The Agrifax Forestry January Market Report shows a progressive decline in the value from $19.90 a year ago to $14 six months ago and $9.90 in December and analysts describe the outlook as grim.

"Demand for carbon permits have eroded due to the slow down in the general economy in Europe and more renewable energy becoming available quicker than previously anticipated," the report stated.

Europe's carbon unit price has fallen by 54 per cent in the past year as in imbalance in supply of and demand for the credits builds.

Agrifax analysts blame ongoing supplies from the United Nations for the oversupply and a report by Societe Generale suggests prices could fall close to zero euros by 2020.

The January report also suggests the see-saw nature of the log export market in recent months, could continue for some time.

According to the January Agrifax Forestry Market Report, there is still strong demand for New Zealand logs in China, despite slowing growth.

Moves by the government to steady the property market there, by building more affordable housing, is increasing demand for building materials such as timber.

New Zealand remains strong in the wider Asian market.

It has lost some market share due to large log volumes out of the Pacific North West, but Kiwi log volumes into the market have increased - particularly into China, where New Zealand imports are at record levels.

Port inventory levels in China are reaching similar levels to those that tipped prices previously and Agrifax analysts indicated they would be keeping a close eye on these inventories through the Chinese New Year period, saying this could set the market tone for the next three to six months.

Looking to February, they anticipate log prices will remain at current levels or lift further.

The South Korean market has remained steady and India is also not changing due to an oversupply.

Domestic log prices have also remained consistent, supported by the lift in export prices. But while log exports are steady or growing, lumber exports were down in most regions during November.

Longer than usual shutdowns at some mills during over Christmas are expected to support timber prices in the coming months.