Exports of raw wood are often under the spotlight and even occasionally controversial. That situation continues, but from a previously unlikely perspective. As woodchip exports continue to decline, it is log exports that have suddenly come under pressure.
As the chart here displays, Australia’s woodchip exports, shown in blue, have been sliding since mid 2019. A potent mix of low pulp prices, faltering demand for printing and communication papers, a stable but below fair value US dollar and an unwillingness from growers to sell hardwood chips cheaply appears to have seen hardwood chip exports slide.
To go straight to the dashboard and take a closer look at the data, click here.
It should be noted that the data here excludes softwood chips and products like wood pellets. The emphasis of Australia’s trade in woodchips has always been on hardwood.
The chart shows that after climbing progressively to reach an all-time annual peak of 6.934 million bone dried metric tonnes (bdmt) in May 2019, exports have fallen away to total just 4.140 million bdmt sixteen months later. The market for hardwood chips remains effectively split between traditional Japan and dominating China, with smaller volumes supplied to other countries.
To go straight to the dashboard and take a closer look at the data, click here.
While the situation for hardwood chip exports has been stunning, the reality is that in recent months, there had been some increased exports, albeit the countries of destination have been partially obscured by the application of confidentiality restrictions.
For log exports however, the situation has recently been more difficult in the last two months. For reported phyto-sanitary reasons, logs exported from Queensland, then Victoria and subsequently South Australia and Tasmania, have been banned from importation into China until further notice. It is understood industry and government continue to work to resolve this important matter.
Data for the year-ended September precedes the emergence of the formal trade bans on Australian log exports. It is an instructive period because even as woodchip exports were in decline, softwood log exports were rising, as the first chart in this item showed.
The chart below shows the recent details of Australia’s softwood log exports, but only to the end of September, prior to the bans taking effect. Note that the additional distinction between softwood grades (mainly sizings) only commenced in January 2017, prior to which the red bars displayed all of the exports.
To go straight to the dashboard and take a closer look at the data, click here.
Softwood log exports totalled 3.749 million m3 year-ended September 2020, up 6.2% on the prior year, but still comfortably short of the record 4.049 million m3 recorded three years earlier in 2017.
Although exports have increased recently, the more notable feature is that progressively, the influence of larger dimension (>15cm) pine logs shown in red bars has been diminishing. The smaller dimension logs (<15cm) shown on the green bars have significantly increased their influence among the exports.
These are widely held to be arisings from sawlog targeted harvests, thinning operations and other material for which there is no viable domestic processing. They have shot to export prominence over the last year, lifting from 25.3% of the total year-ended September 2019 to 44.9% of the total, year ended September 2020.
However, for all that is interesting, the export trade has come to a screaming halt with the Chinese import restrictions, with no sign as to when or if the volumes will be returned to the mainland Chinese market that constitutes over 98% of demand.
Australian wood resource exporters are having a tough time of it right now!
