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Sawn softwood imports flex their supply and muscles

‘Flexing’ is often left to body builders, but importers of sawn softwood products into Australia have been demonstrating their capacity over the last year, delivering a scintillating 956,270 m3 year-ended August. Imports were up an amazing 62.8% on the previous period, demonstrating the capacity of the global supply chain to bridge the demand-supply gap when the conditions are right.

One element of the conditions being right is the price. In August, partly impacted by currency movements, the weighted average price of all sawn softwood imports lifted 11.7% to AUDFob849.17/m3. This picked up changes in global supply and demand dynamics and represents another new record.

Imports for the month totalled 86,993m3 which was the strongest August since 2018, when imports for the month were 97,339m3, as the second chart demonstrates. There may be a downturn in new approvals, but the massive pipeline for work is a hungry beast, requiring feeding for a very long time to come. Imports are at sustained high levels for that reason alone.

As is often the case, imports were dominated by three main products.

The single largest grade is Dressed Fir or Spruce (4407.12.10.16), imports of which totalled 375,156 m3 year-ended August, accounting for 39% of total imports. The weighted average import price in August 2022 was AUDFob749.45/m3, more than double pre-pandemic levels, but slightly moderated from a year earlier.

The second largest contributing grade is Other (Non-Pine) Untreated (4407.11.10.39), imports of which totalled 171,664 m3 year-ended August, accounting for 18% of total imports. The weighted average import price in August 2022 was AUDFob817.44/m3, again, significantly more than double pre-pandemic levels and at a new record in August.

The third of the ‘big three’ is Treated ‘Other’ (4407.11.10.34), a grade dominated by New Zealand and for which imports totalled 136,061 m3 year-ended August 2022. Unlike the two other major grades, the weighted average price of AUDFob866.07/m3 is lower than one year ago, but within the medium-term range, as the chart here shows. What is most remarkable about this grade is the stellar 212% growth in the volume of imports over the year-ended August 2022.

Leaving aside the role of New Zealand in supplying the treated material identified above, the majority of supply is from Europe. As the chart here shows, the big movers have been Germany (217,281 m3), Sweden (131,730 m3) and especially Lithuania (127,633 m3). The latter has seen its imports rise an enormous 229.7% over the year-ended August.

The ability of import supply to flex to meet the Australian market is a much-needed strength.

Posted Date: November 9, 2022

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