Sales of locally produced sawn softwood declined 4.0% for the year-ended November 2015, declining to 2,633,103 m3. The sales volume declined 110,732 m3, with very different sales experiences for the major grades. The largest volume of sales continues to be of the Structural <120 grade, which declined 6.86% over the year-ended November, while the competing product, the treated H2F grade defied the total decline, seeing sales grow by 10.69% over the same period.
As the chart below shows, total monthly sales in 2015 have been very similar on a month-on-month basis, with those of the prior year. Equally relevant, despite slipping from their record levels of less than a year ago, domestic sales remain strong.
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Of greatest interest is the continuing battle for supremacy between the leading product, Structural <120 and the clear second-place holder H2F. For the year-ended November 2015, sales of Structural <120 amounted to 731,413 m3 or 27.8% of the total. The rapidly growing sales of H2F amounted to 565,140 m3 or 21.5% of the total in the same period.
Similar to sales of H2F, the third largest volume of sales over the year was recorded for the Packaging Grade, sales of which grew by 11.04%, reaching 452,784 m3 or 17.2% of the total.
Combined, these three grades account for almost two-thirds of the total volume of sales. Relevantly, the two structural grades accounted for 49.3% of total sales. At approximately half the total volume each year, structural grades are the mainstay of all sawn softwood sales. The growth of H2F is cannibalising only the other structural grade (Structural <120) and not other sawn softwood products.
While the performance of the structural grades is directly linked to the state of the housing market, sales of packaging grades are driven by broader economic conditions. A range of industrial sectors – manufacturing is the obvious example – have declined in recent years. Their demand for packaging has declined also.
The strength of the Packaging grade is clear in the following chart. What is less clear is the driver for this growth.
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