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Log exports lift, but new markets prove tough

Frozen from the mainland Chinese market, Australia’s log exporters are managing to recover some export opportunities, with some proving to be tough nuts to crack.

Australia’s total log exports lifted to 245,832 m3 in April 2021, having been forced down as low as 106,941 m3 in February 2021. Exports each month over the last year can be seen below, in the chart prepared by IndustryEdge’s Wood Market Edge online platform.

 

Australian Log Exports by Main Country: May ’20 – Apr ’21 (m3 & USDFob/m3)

Fig35

fig35

Because the chart includes both softwood and hardwood log volumes, it does not show up any significant price differentials, at least in US dollars, over the year, although the general downward trend is observable.

What it clearly shows is that as China shorted itself of Australian logs, India, Korea and other nations stepped into the market.

Before examining those countries in detail and from the perspective of softwood logs, it is worth examining the Malaysian volume, all of which is hardwood exports.

 

Australian Hardwood Log Exports by Main Country: May ’20 – Apr ’21 (m3 &USDFob/m3)

Fig36

  fig36

Hardwood log exports are patchy, and were a little less than 34,000 m3 in April 2021, it is plain to see that despite the potential volumes available, when China departed the market, Malaysia remained pretty much the sole recipient, supplemented by some small volumes shipped to Vietnam.

When we consider softwood log exports, it is plain to see that India has become the main market, supplemented by Korea. With exports to the main countries totalling 211,427 m3 in April, there is a recovery of sorts underway, but to be explicit, that is no more than half what was previously exported. Exports to India totalled 184,524 m3 for the month.

Most significantly, as we can see here, the average export price plunged to USDFob82/m3.

 

Australian Softwood Log Exports by Main Country: May ’20 – Apr ’21 (m3 &USDFob/m3)

Fig37

 fig37

With India so dominant in the softwood log trade right now, and prices appearing to plunge, IndustryEdge has also supplied these two charts based on its data series. The first shows softwood log exports by size, using the available <15 cm SED and >15cm SED. In April, the proportions were almost exactly equal, but it is clear the decline in exports has been taken up for the larger dimension logs.

 

Australian Softwood Log Exports by Dimension: May ’20 – Apr ’21 (m3)

Fig38

 fig38

Source: ABS derived, and IndustryEdge

 

The second chart in this sequence shows that, as a general rule, larger dimension logs cost more money, but that was not the case – in this instance now displayed in Australian dollars – in April 2021.

In April, the average export price for softwood logs >15cm plunged from AUDFob140/m3 in March, to a record low AUDFob90/m3. That was below the <15 cm logs, for which the average price was AUDFob124/m3.

We have heard some speculation that the massive and distressing number of funeral pyres required right now could be driving up demand for imported wood in India. Perhaps that is possible, but we suspect that is unlikely, with other suppliers shuffling shipments one way, as Australian exporters shuffle them towards India.

 

Australian Softwood Log Exports by Dimension: May ’20 – Apr ’21 (AUDFob/m3)

Fig39

fig39

Source: ABS derived, and IndustryEdge

 

It might be the case that some logs are being exported again – but many more are not. But what is definitively the case is that the price of the new trade is… the price of the logs.

 

 

Posted Date: June 16, 2021

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