Australia’s imports of sawn softwood – long a topic of fascination and interest – appear to have been stable across 2017, rising just 1.8% (<10,000 m3) compared with 2016. Some will argue import stability is a result of a slowing market. While that might be partly the case, and relative currency stability is evident, the domestic supply chain appears to have hit its straps and is close to capacity. All of that helps suppress imports, but the lingering doubt is whether the domestic production level can be retained or matched in the future, as record log exports continue. That consideration sees the industry wondering exactly where the bottom is for imports, and has it already passed?
First, we should place the volume of imports into their correct context. The initial chart here shows total imports of wood products on a monthly basis and on a year-end basis. It should be noted that imports of some products (more than a few Builders’ Joinery products for instance) are only recorded by value, so they are excluded from this chart.
It is easily observed that total imports have risen very strongly especially since mid-2013. On a year-end basis, they peaked in mid 2016. Since then, month-by-month, they have proved to be quite stable, with occasional peaks, but few troughs.
To go straight to the dashboard and take a closer look at the data, click here.
Next, in the context of solid total import volumes, we can turn to import values and include all wood products. The chart shows year-end import values growing strongly as the housing boom commenced and for the 2017 calendar year flattening out, as the boom ends and normality returns.
Observed across almost a decade, this import data also shows that aside from some modest adjustments, the same four grades make the greatest contribution to import values (and here the Builders’ Joinery is included)
To go straight to the dashboard and take a closer look at the data, click here.
These four grades are:
- Sawn softwood (4407.1)
- Mouldings (4409.0)
- Plywood (4412)
- Builders’ Joinery (4418) ~ including Doors, Windows and Posts and Beams
There is frankly no surprise about the contribution of sawn softwood product imports, or about those of Plywood. There has been, but it has dissipated somewhat now, noise about the Builders’ Joinery imports, because they are often of quite elaborately transformed wood products like Doors, Windows and specialty timber products. This means they are of higher value than most other wood products, which does make them stand out.
Equally frankly, there is surprise about the ‘Mouldings’, because the value is perpetually high and remains strong. The two main products are softwood mouldings and hardwood floorboards.
It is only when we see sawn softwood imports in this context that we can see, important though they are, by value, they play a relatively small part in the total value of imports. For calendar year 2017, sawn softwood imports were valued at AUD305.1 million, up 1.1% on the prior year, but accounting for just 16.1% of wood products imports valued at AUD1,890.3 million.
As the chart below shows, for 2017, the value of sawn softwood imports remains high relative to most prior periods. This year-end value will deteriorate as higher value months from earlier in 2017 roll out, to be replaced by what are expected to be lower value months in early 2018.
To go straight to the dashboard and take a closer look at the data, click here.
The volume experience is a little – not a lot – different to that for the value of sawn softwood imports. For the year-ended December 2017, imports totaled 601,336 m3, up just 1.8% on the year earlier. Still, as the monthly bars show, there is considerable choppiness in the recent data, with no clear trend over the second half of 2017.
To go straight to the dashboard and take a closer look at the data, click here.
Probably correctly, there is industry expectation that imports have bottomed, and indeed, turned the corner and may head back up to higher levels. FWPA’s Statistics & Economics Manager, Jim Houghton, has commented publicly that this is the most likely option.
The data may point to that on face, but there is the possibility that the rise in imports is at least a little seasonal.
Should imports rise over the coming months, in a slowing housing market, the very clear evidence of domestically produced sawn softwood being in short supply, will be confirmed. The housing supply-chain has been seeking access to more wood for close to a year now. If domestic supply remains unable to rise, imports will increase to meet demand.
If that is the case, in the short term at least, that is no cause for concern within the domestic industry. It will simply be supply rushing up to meet demand. However, in the longer-term, rising imports would accentuate the under-supply situation in the market currently, and will undoubtedly increase the pressure on what are burgeoning softwood log exports.
