Average prices lifted in December quarter [2 of 3]

Conditions were clearly ripe for price increases for most grades of sawn softwood in the December quarter. The market delivered average price increases in most of the measured markets, but the increases themselves were somewhat ‘measured’. Given the market conditions, some would doubtless describe the December quarter’s price increases as modest.

In the first chart, below, we can see the comparison between weighted average prices over the last five quarters. This allows us to examine the near-term price experience, encompassing all of the pandemic-to-date.

To go straight to the dashboard and take a closer look at the data, click here.

At one level, the chart does not show much movement – and that is exactly the point. Despite a couple of blips and blurs over the course of 2020, weighted average prices for locally produced sawn softwood were largely stable. The table below emphasises this point.

At a grade-by grade level, from DQ’19 to DQ’20, the largest price changes were recorded for Packaging – Dry (+6.4%) and Treated Structural >120 mm (-2.1%). In fact, the structural grades were even more tightly bound, with average prices increasing no more than 1.3% and decreasing no further than -2.1%.

All the grade-by-grade charts are available on the FWPA Data Dashboard, but it is relevant to examine one or two of the major grades over longer time periods.

First, as we can see below for the Structural Untreated <120 mm grade, the weighted average price (red dotted line) barely moved over 2020, but the state-level average prices were significantly more volatile. As an example, in the December quarter, the weighted average price was $517.24/m3, but was bounded by a range of $501.12/m3 (SA) and $566.85/m3 (Qld).

To go straight to the dashboard and take a closer look at the data, click here.

By comparison, the second chart shows the weighted average price movements of the Structural Treated <120 mm grade. Here we can observe that despite the year-on-year change of 1.3% being very little different to its untreated sibling, this price experienced more fluctuation over the course of 2020. By the December quarter, with Queensland again the upside outlier, the weighted average price of $570.93/m3 was bounded by prices as wide as $611.41/m3 (Qld) and $549.07/m3 (NSW).

To go straight to the dashboard and take a closer look at the data, click here.

Albeit the weighted average price lifted 2.1% in the December Quarter, for the full year, the External Treated H3 weighted average price lifted an average of just 0.4% over 2020, as we can observe below. Within states there was very little price variation across the year (albeit they operate at different price points), which flowed through into the weighted average price.

To go straight to the dashboard and take a closer look at the data, click here.

Finally, it is worth taking a moment to examine weighted average prices for one of the packaging grades – in this case the ‘Dry’ product – because it is here that the largest price movement was recorded. Relevantly, there are some jurisdictions that do not have prices every month or quarter and between those prices that do exist, there are often wide ranges. That creates volatility that underpins why weighted average prices work for consistent data and nothing much works where there is insufficient or inconsistent data.

In this case, the price rise of 6.4% was recorded mainly because one state experienced solid price increases and it is one of just two states that has consistent data – it carried weight in the average price determination. At a weighted average price of $287.77/m3, Dry Packaging was bound in the December quarter by $311.75/m3 on the upside and $285.26/m3 on the downside. The latter was the Victorian price and is so close to the weighted average price that it necessarily represents the vast bulk of the volume.

To go straight to the dashboard and take a closer look at the data, click here.

Despite sales volumes lifting solidly over 2020, in general, average prices barely moved at all. There may be some lag effect, with increases due shortly, of course.

Given the experience in the latter part of 2020, it remains to be seen what the latest sales forecasts can tell us.