Although it is not quite uniform, the average price of most grades of imported sawn structural softwood products has risen steeply over the last few months. That the rising average prices have coincided with a large rise in imports is also notable, but as the data shows, has not been uncommon over the last few years. The question on everyone’s minds right now, is how long will the import price and volume rally last, and are they directly connected?
The chart below shows total imports of sawn softwood. It demonstrates that, at an all inclusive level, periods over which import volumes have been higher, regularly coincide with periods of rising or higher prices. However, it also shows that just as often, shortly after the green line (price) spikes up, the red line (volume), begins to fall.
To go straight to the dashboard and take a closer look at the data, click here.
Most recently, we can observe – as we have discussed before in Stats Count – that in mid to late 2017, falling import prices were joined by rising import volumes. A not uncommon experience, as we set out above. But the difference might well be that when the average price re-corrected and began to rise again, import volumes did not drop off. In fact, the annualized volumes continued to rise.
The data and charts that follow show some of the different structural sawn timber grades and attempt to isolate this recent experience, to provide some market insights.
Based on import codes at least, the largest structural imported product is ‘Other’, dressed, excluding Radiata Pine. This untreated product, imports of which are shown in the chart below, demonstrates a close correlation between the patterns of movement of import volumes and prices.
To go straight to the dashboard and take a closer look at the data, click here.
Import volumes have grown strongly since December of 2017, rising almost 50% on an annualized basis from 153,156 m3 over the year-ended November 2017, to 229,445 m3 over the year-ended May 2018. In May itself, imports were almost double those of May 2017. That is a significant lift in imports by any measure.
However, the more remarkable factor is that import prices rose – over the same period, by a solid 13.7%, to reach a record high monthly average of AUDFob378.88/m3 in May 2018. In the past typically, sharp rises in import volumes are usually led by market conditions that include lower prices, not rising prices. However, in recent times the international demand and supply balance has changed. Strong housing growth in key international markets particularly North America now means the Australian market must pay comparable prices to attract import volumes to meet local internal demand.
The next structural import grade to examine is relatively new (commencing January 2017), it splits out sawnwood of fir or spruce. Because the data is relatively short run, we can set the volume growth aside, as it has been split from other grades previously. It might suffice to say that for the year-ended May 2018, the volume imported totalled a significant 121,774 m3.
However, as the chart below shows, we cannot as easily set aside the growth in prices (the green line). At AUDFob403.87/m3 in May 2018, the average price was 21.4% higher than in May 2017, but compared to November 2017 was 22.6% higher. Put another way, all of the price increase was recorded in the last six months.
To go straight to the dashboard and take a closer look at the data, click here.
Finally, and really by way of contrast, we examine imports of treated Radiata Pine, the major supplier for which is New Zealand. As the chart below shows, it does have a very different price and volume experience.
Compared to a year earlier, imports were 50% higher over the year-ended May 2018, than for the prior corresponding period, totalling a solid 47,123 m3. We say ‘solid’ because while the growth has been strong, the reality displayed in the chart is that annualized imports topped out at 80,987 m3 in November of 2013. Prior to the recent import rally, which appears to coincide in part with the closure of the Morwell mill in Victoria, imports had been in a long decline.
The price is a different matter.
To go straight to the dashboard and take a closer look at the data, click here.
Following more traditional expectations, the average price of imports has declined 20.8% from May 2017 to May 2018. Although it has been lower, at AUDFob799.01/m3 in May, the average price has fallen sharply.
There are other grades of sawn structural softwood imports that have experienced volume growth over the last year, and especially the last six months. Most have also experienced price increases in what remains a buoyant market.
