Sawn softwood import supply slide continues

Over the year-ended April 2023, sawn softwood imports totalled 775,449 m3, down 9.0% on the year prior. Imports are falling rapidly and now appear locked into a cycle within a range of 550-600,000 m3 if the trend continues.

The quarter ended April saw imports fall 28.7% to 121,147 m3, compared with the almost 170,000 m3 imported for the quarter ended January. This provides some clue as to how rapidly imports are coming off their peak but is confirmed when we consider the quarter-ended April was more than 59% lower than for the same quarter in 2022!

The total weighted average import price continues to fall and was AUDFob641/m3 in April 2023, having peaked at AUDFob878/m3 just five months earlier in November 2022.

The headline chart below, provides the details and shows that unlike prices, import volumes have been declining rapidly, as inventory and the slow pace of housing construction continue to take their toll.

Australian Sawn Softwood Imports: Jan ’21 – Apr ‘23 (m3 & AUDFob/m3)

Source: ABS and IndustryEdge

The fall from the March 2022 import record is telling, but no more so than the near 50% decline from April 2022 to April 2023.

At the state level, sawn softwood imports continue to alter as total volumes change dramatically.

Sawn Softwood Imports by State: Jan ’21 – Apr ’23 (m3)

Source: ABS and IndustryEdge

Down 7.9% to April 2024, IndustryEdge’s sawn softwood forecast is stabilising, but at a lower base

IndustryEdge’s Sawn Structural Softwood Demand Forecast indicates demand for structural timber continues to gradually fall, settling somewhere around 163 km³ per month over the year to the end of April 2024, down from approximately 180,000 m3 per month over the last year. The forecast factors in the pipeline of future building work and the likely timeframe in which the works could occur.

The forecast shows new demand for structural sawnwood will fall around 7.9% over the year to the end of April 2024.

IndustryEdge’s Monthly Sawn Structural Softwood Forecast: Apr ’22 – Apr ’24 (m3)

Source: ABS, FWPA and IndustryEdge

Four main products dominate supply

Imports continue to be made up of four major products as the chart here displays:

• 11.10.43 (167,787 m3)
• 11.10.39 (151,203 m3)
• 11.99.15 (99,440 m3),
• 12.10.16 (240,280 m3)

Lithuania and New Zealand on the rise as others slip back

Among the major suppliers, there have been few places to hide as the import volumes have declined, Lithuania lifted its contribution over the year-ended April by 35.6% to 118,335, while New Zealand saw an 8.7% increase to 112,634 m3.

However, Estonia (down 22.5% to 69,503 m3), Germany (down 14.2% to 159,846 m3) and Sweden (down 53.9% to 58,042 m3) were among the major supplier countries to see steep import declines.

Some importers report the extent of inventory through the supply chain and on the water is sufficient reason for the steepness in the import downturn. Others are however also pointing to the concern that ought be felt in an Australian domestic market that looks likely to be soft, but not crash entirely.

In a market where import prices are deteriorating, those with an eye to future shortages could be back in the market sooner, rather than later, according to one importer.

The price deterioration can be seen in the chart here, for the 4407.11.10.39 product, imports of which come from most major European suppliers.

In November 2022, the weighted average import price was AUDFob800/m3. That had fallen to AUDFob448/m3 in April 2023.