10.12.2018

Forestry related business lending

With the latest log market report recently released, it’s a good time to update you on what this means for forestry-related business lending and the trends we’re noticing within our group for forestry-related finance solutions.

Export log prices have all but recovered from the dip we saw in July. This is positive, with pricing still at levels that generate good returns for the forest owner, and which is stimulating demand for logging crews and log transport. 

What does this mean for business lending? Even though the export log prices have recovered, we’re seeing some increased conservatism from some lenders (both main banks and specialist finance lenders) for funding of forestry-related business. This conservatism comes from forward-looking concerns around potential challenges like a wider slowdown in the Chinese economy, which they feel may impact on future demand for New Zealand log exports to China.

Another concern is that there are more crews coming into the woodlot market, which has tended to be more fickle in the past.Also their own exposure to the forestry industry has grown significantly in recent years.  This meaning that their exposure to forestry is hitting maximum allowed concentration levels relative to the rest of their lending book so they are being more selective on what deals they will take on.With this exposure hitting the maximum-allowed concentration levels relative to the rest of their lending book, lenders are therefore being more selective on what deals they choose to work with.

 

While the overall health of the industry remains positive, feedback from machine suppliers indicates some slowdown in activity for new machine purchases and this is flowing through to second hand stock levels.  This is a positive for buyers, with good quality machines more readily available and with shorter lead times than we have seen for some time.

Finance New Zealand specialises in finance solutions for forestry equipment and forestry-related business finance, and our team has ample experience in forestry-related business lending.  We have established relationships with a wide range of funding partners, and we carefully assess each client’s situation and then match their request to the lender who’s best suited to our client’s profile. This ensures that our clients receive a finance solution that’s best suited to their overall business and ongoing lending requirements. 

If your business is operating in the forestry industry and you need forestry equipment finance for a new or used piece of equipment, or would like to explore a tailored solution across your wider business, our team are always here to help. Contact us today.