Against the trend of the last year, the volume of sales of softwood timber surged in September 2015 to a near record 259,910m3. This was a 14.7% rise on the prior month and was 11.0% higher than for September 2014. Despite a year of relative softness in the value of domestic sales, the September surge saw year-end sales rise to 2.635 million m3.
Year-end sales to the end of September 2015 were 3.8% lower than for the year-ended September 2014, underscoring the recent year’s softness. The question in the industry is whether the September result is the beginning of a cyclical rise, or just a blip on the landscape.
The chart below provides the details.
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The chart above shows all softwood sales, regardless of grade. It demonstrates that despite the growth in dwelling approvals – you can read more in this edition of Statistics Count – domestic softwood sales declined through much of 2014 and 2015. Given this occurred over a period when the Australian Dollar depreciated sharply against the US Dollar (but less against the Euro), expectations would normally be that domestic sales would grow, at the expense of imports.
That didn’t occur and so, as a result, further analysis is required because while it is indicative of the total trend and position of sales, the aggregated data does not provide all of the details.
Broken down on a grade-by-grade basis, the sales data shows that as much as anything else, the patterns of sales are changing, as the chart below shows.
To go straight to the dashboard and take a closer look at the data, click here.
Some sales adjustments, over the last year, appear to be structural in nature and others appear related more to the maturing housing cycle.
Dealing literally with the ‘structural’ first, sales of what is still the largest single grade, Structural <120, declined to 744,800 m3 for the year-ended September 2015, down 4.39% on the prior year. However, its apparent replacement product, the treated H2F, saw sales rise to 550,200 m3 for the same period, up 9.94% on the prior corresponding period. Combining the two, sales of the main structural grades rose a modest 1.2% for the year-ended September 2015. The long-term trend is towards the treated structural product, but in total, the volume of sales of structural softwoods appears to be growing, albeit a little more slowly than in prior years.
The maturation of the housing cycle also appears to be evident in the more detailed data. Sales of Outdoor Domestic products such as weatherboards, for example, declined 9.95% over the same period and were worth 183,000 m3 for the year-ended September 2015, while over the same period, sales of Fencing products were up 1.9% and Landscaping products, a stronger 5.74%.
It is difficult to draw particular conclusions from this data, but there seems little doubt there is life left in the domestic housing market, albeit it has softened.
There is evidence that market is maturing with sales moving strongly into the ‘post-construction’ products, but even that can be a little misleading. Where the domestic market faces import competition is for structural timber (in the main). There is comparatively little import competition for landscaping and fencing materials. That market moves with domestic demand and domestic sales represent the market, which is not the case for the structural grades.
It remains important to drill down to the product level and to match that with the demand drivers, to get precise guidance on where the market will go next.
