Australia’s softwood log exports exploded to a monthly record in August 2020. Exports totalled 513,755 m3, up a stonkering 59% on the prior month and exceeding the prior record (May 2017) by 10%. Driven by strong demand in the main Chinese market, exports are about as patchy as they could be right now, with global market asymmetry an abiding feature.
One element of the pandemic’s widespread impact has been demand in one region becoming misaligned with supply from another. The speed and extent of lockdowns over 2020, starting in China and rippling widely subsequently, has resulted in rapid shifts in supply and demand.
The chart below shows softwood log exports since January 2017.
There are two features to these softwood log exports that require some further examination – beyond the global market asymmetry.
First, we can see that proportionally, the logs shown in blue, have declined in proportion quite significantly, since the middle of 2019. These are pine logs, >15 cm diameter. Leave aside the last month when they grew sharply, for the most part, these larger dimension logs (some still quite small obviously, at just 15cm SED) have been in export decline. The strategies of growers to realign estates have reportedly been a significant part of log exports. With leading growers committing to pulling back on exports of larger dimension logs, the experience has seen more smaller dimension logs be exported.
Looking at the larger dimension logs, we can see the recent experience in the chart below. Exports totalled 234,610 m3 in August, up 59% on the prior month, and the highest since May 2019.
Equally relevant, it is also clear that the average price dropped sharply over the last few months, falling to a new low of AUDFob126.56/m3 in August. Log export data has only recorded dimensions since the start of 2017, so on this basis, August saw these larger dimension logs record their lowest price on record.
So, that is the experience with the larger dimension logs, but what of their smaller dimension counterparts?
The most remarkable – and vivid – of the charts in this analysis shows that at 256,628 m3, softwood logs <15 cm diameter recorded what can only be articulated as a massive spike, lifting a huge 84% on the prior month. These logs are understood to be thinnings generated from planned silviculture activity and therefore ought be stable, and indeed they have been – mainly.
The same is the case for the average price. Leave aside the early days of the recording of log exports by dimension and the peculiar period where these smaller dimension logs were theoretically higher priced than their larger cousins, there has been stability in smaller dimension log prices. At AUDFob115.96/m3 in August, prices were modestly lower than in recent months, but by no means at their base.
Depending on where you sit in the supply chain, you cheer for log exports or you might even despair of them. They are however, a reality. For now at least.
The barb on the end of the August spike in softwood log exports came in early November, with news that for reported phytosanitary and quarantine reasons, China was suspending imports of logs despatched from Queensland.
We know that industry is seeking more information and details about the specific concerns raised and to establish steps to identify any quarantine issues. It is noted that the advice from the Chinese administration does not distinguish logs by species or provenance, only by their state of origin.
