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Annual woodchip exports totalled 5.766 Mbdmt year-ended January 2023

Australia’s combined annual exports of hardwood and softwood woodchips totalled 5.766 million bdmt year-ended January 2023. Hardwood chips totalled 4.646 million bdmt, 7.0% higher than a year earlier. Exports of softwood woodchips totalled 1.119 million bdmt. The chart displays total woodchip exports on a monthly and annual basis.

Australian Woodchip Exports by Species: Jan ’19 – Jan ‘23 (‘000 bdmt)

Source: ABS, GTIS & IndustryEdge estimates

Export prices

Australia’s average hardwood chip export price was AUDFob248/bdmt in January 2023, up 3.1% on the prior month. Average softwood chip export prices declined 22.7% to AUDFob181/bdmt.

Woodchip Export Prices by Species: Jan ’19 – Jan ‘23 (AUDFob/bdmt)

Source: ABS, derived and IndustryEdge     

The following chart shows the same prices, calculated in US dollars, using RBA end of month exchange rates.

Woodchip Export Prices by Species: Jan ’19 – Jan ‘23 (USDFob/bdmt)

Source: ABS, derived, RBA and IndustryEdge            

Australian Woodchip Export Market Update

 

Current

% Change

Month

Jan ’23

MoM

QoQ

YoY

Total exports (kbdmt)

306.5

-44.9%

-14.7%

8.2%

Hardwood (kbdmt)

242.0

-44.1%

-16.8%

7.0%

Softwood (kbdmt)

64.6

-47.9%

-6.7%

13.1%

Hardwood (AUDFob/bdmt)

248.08

3.1%

5.1%

4.2%

Softwood (AUDFob/bdmt)

180.83

-22.7%

0.7%

10.8%

 

Based on month-end exchange rates, the table below shows the average price of Australia’s woodchip exports in US dollars for the last three months.

Australian Woodchip Export Prices: Nov ’22 – Jan ’23 (USDFob/bdmt)

Species

Nov ‘22

Dec ‘22

Jan ‘23

Hardwood

146.63

163.00

174.57

Softwood

163.44

158.49

127.25

Source: ABS, derived, RBA and IndustryEdge

Australian outlook

The 2022-23 outlook for Australian woodchip exports remains STRONG. This applies to hardwood chips and softwood chips. The prognosis for softwood chip exports could change rapidly if Australian log exports are allowed to re-enter China.

In January, the Bleached Eucalypt Kraft (BEK) pulp price fell around 7% to USD750/t in China, finally correcting by USD55/t with further declines locked in through February and into March. The Bleached Softwood Kraft (BSK) price was stable at USD890/t, seeing the spread push out to USD140/t.

While pulp prices are falling, the BSK price is still 11% higher than one year ago and the BEK price is more than 27% higher over the year. For BSK, we could argue the price differential over the year is linked to inflation, to some extent, but the BEK price increase is more than that. February pricing is still to filter through and will be provided as soon as it becomes available.

China Pulp Prices: Jan ’12 – Jan ‘23 (USD/t)

Source: Hawkins Wright and IndustryEdge

Alongside supply stability returning, it is difficult to by pass demand dynamics when considering the pulp price trajectory. It certainly appears the price of bleached hardwood pulp will fall further, but that is mostly a supply-side correction.

Stability is returning to demand for tissue grades and as printing paper demand declines, it is being replaced by a greater uplift in packaging demand. The packaging sector is now – in our view – driving the future of the pulp market. Long the domain of the softwood sector, hardwood pulps are making their presence felt in the packaging sector, in South America, but also in China.

Recent research published by the Technical Association of the Pulp and Paper Industry (TAPPI) makes plain the advantages eucalypt pulps can have in packaging grades. The question for the pulp market will be whether there is sufficient eucalypt supply globally to meet all the requirements being heaped upon its shoulders.

Softwood chip will remain in short supply, while there is a high level of integration between plantation and forestry activity and wood processing for solid wood, as well as for pulp and paper production. Any significant disruption to vertical integration at a regional level appears decades away.

Global market update

Unfortunately, as we prepared this briefing, key data from China was unavailable for February. As data is updated, we will make it available.

Given the topical relevance of Taiwan right now, the following analysis of its recent hardwood chip imports may be of interest.

As a senior industry observer commented recently – it is all too easy to dismiss Taiwan because its volumes are small compared with China or Japan. That is very true, with the country’s intake totalling less than 1.0 million bdmt per annum. However, as the industry luminary was alluding, Taiwan’s imports are very stable, as the chart below demonstrates.

Taiwanese Hardwood Woodchip Imports by Country: YE Nov ‘20 – YE Nov ‘22 (bdmt)

Source: GTIS & IndustryEdge

Importantly for Australia, demand from Taiwan remains elevated and Australia is the major supplier, accounting for almost 47% of all imports in 2022. Other countries pop in and out, but it is Australian supply that dominates.

 

 

bdmt

Year Ending November

% Change YE Nov-21 to Nov-22

2020

2021

2022

Australia

453,080

420,191

418,526

-0.4%

Chile

162,386

57,436

0

-100.0%

Indonesia

52,515

26,516

26,035

-1.8%

South Africa

0

69,336

0

-100.0%

Thailand

0

41,664

227,061

445.0%

Vietnam

207,298

240,387

227,374

-5.4%

Other

381

126,675

413

-99.7%

 TOTAL

875,660

982,204

899,410

-8.4%

 

It has long been held – and for the most part it is true – that exporting to Taiwan involves lower prices than to other countries.

This chart shows the average monthly prices for Australia, Vietnam and the total weighted average price in USDCif/bdmt. There is more than a little to consider in so simple a chart.

First, we can see the average price (black dotted line) tracked up during the pandemic as freight costs exploded. Though those freight costs have begun to moderate, the cost of delivered hardwood chips has barely diminished. Could that be the price of heightened tensions in the sea lanes around Taiwan?

Second, as befits the dominant supplier, Australia leads the price over most time periods.

Taiwanese Hardwood Woodchip Imports by Country: Jan ’20 – Nov ‘22 (USDCif/bdmt)

Source: GTIS & IndustryEdge

In the third chart, it is worth examining the Australian average hardwood chip export price into each of China, Japan and Taiwan. Effectively, though mainly eucalypt chip, the majority of the supply to Taiwan has been derived from native forests. That goes some way to explain the price differential, though not the full journey. As the chart shows, the differential between Taiwan and China is routinely between USD130-150/bdmt on   delivered basis. In almost all situations, Taiwan pays about 40% of the China price for hardwood chips from Australia.

Australian Hardwood Chip Export Price by Main Country: Jan ’20 – Nov ’22 (USDCif/bdmt)

Source: GTIS & IndustryEdge

The charts and tables were assembled from the Asian Woodchip Deliveries data file available to IndustryEdge subscribers on a monthly basis.

Posted Date: March 30, 2023

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