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Imports of sawn softwood continue to decline

Continuing to fall, Australia’s imports of sawn softwood declined to 631,206 m3 for the year-ended April 2016, recording their ninth successive monthly decrease and their lowest volume since December 2014. With an Australian Dollar that has been typically volatile but is still trading in the USD0.70 to USD0.75 range, further declines are anticipated in coming months.

For the year-ended April 2016, imports averaged 52,601 m3. However, underscoring the decline in imports, the monthly average over the last six months has been 49,131 m3.

One further reason that declines will continue is that there remain several months (most notably June and July 2015, when imports were higher than the monthly average of the last year. If the next three months see the monthly import volume fall to similar levels of the last half-year, annual imports will fall to something below 600,000 m3. The chart below shows the monthly and year-end data. 

Fig7

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

The single largest grade of sawn softwood imports is ‘Dressed Coniferous – Other’. The grade accounts for approximately one-third of all sawn softwood imports and is dominated by European trade.

For the year-ended April 2016, imports totalled 216,361 m3, down 10.3% on the prior year, but still accounting for 34.3% of total sawn softwood imports for the year. Having risen dramatically from mid-2014, when year-end imports routinely amounted to approximately 125,000 m3, imports rose to peak at 271,895 m3 for the year-ended September 2015. As the chart below shows, while monthly imports remain higher than before the surge of 2014, they have declined relatively quickly, totalling just 15,219 m3 in April 2016.

Fig8

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

The mix of countries involved in delivering imports of dressed sawn softwood to Australia has changed dramatically over the last year. The chart below provides some clues to this, but the details are more dramatic than the chart is able to display.

For the countries that grew their positions, supplies from Sweden grew by 40.9% for the year-ended April 2016, reaching 59,662 m3, while Estonia moved into the lead position, growing their imports by 22.0% to supply 64,458 m3 for the year.

All the other three major importing countries saw their supplies to Australia decline. Austria moved from market leader with its imports decreasing 53.9% to 26,269 m3, while Finland recorded a decrease of 41.7% to supply 23,178 m3. Lithuania experienced an import decline of 19.3%, delivering 27,329 m3 for the year-ended April 2016.

Fig9

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

The result is that not only has Australia’s imports of dressed sawn softwood decreased, the countries involved in the trade have effectively changed places, with the ‘leadership board’ tipped almost on its head.

As Professor Julius Sumner Miller would have said, “Why is it so?”

The answer would usually be considered to be the import price. However, that orthodoxy doesn’t seem to apply here, because on average, supply prices have moved, but large differentials remain between average prices. 

Without overdoing the analysis (the data is available on the FWPA Data Dashboard), an example will suffice. 

Estonia supplied 52,822 m3 of dressed sawn softwood for the year-ended April 2015, at an average price of AUDFob400.41/m3. The year-ended April 2016 saw it deliver 64,458 m3 at an average price of AUDFob391.11/m3.

By contrast, the average price of Austria’s supply as it lost the number one mantle, rose from AUDFob322.04/m3 to AUDFob327.23/m3.

Now we concede that these are not necessarily like products. Sizes and qualities differ between suppliers and prices move with them. There are other drivers, including costs of freight that increase the delivered cost (the real cost from the buyer’s perspective).

In summary, imports of sawn softwood to Australia have declined, with the main product not only declining, but changing its patterns of supplier nations for reasons that seem to include price, but that also go beyond price considerations.

 

Posted Date: June 28, 2016

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