Imports of sawn softwood – deployed mainly to housing – rose a massive 40.0% in 2021, to total 666,164 m3. Although still below peaks reached in previous booms, the steady increase of imported supply has continued as the current housing boom creates entirely unexpected opportunities.
As the chart here shows, unlike the boom of 2018 and 2019, the current growth in imports has come on more slowly. This has not been as a result of less certain demand, but rather the much-discussed supply-side factors.
While the intersection of demand and supply took some time to head towards equilibrium and is clearly not at that point yet, the chart also shows the month-on-month average prices. These have been unrestrained for the most part, rising to all-time records month after month after month. In December 2021, the weighted average import price was AUDFob821.38/m3. Moreover, for calendar year 2021, the weighted average price was 25.3% higher than for the year earlier!
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Higher prices have been a necessity for a market facing runaway demand and in a context in which suppliers face huge increases in shipping and freight costs, not to mention rampant competing demand from other regions.
The result is that the value of imports over 2021 lifted 75.3% compared with 2020.
Despite imports being up across the board, supply is dominated by three products that provide around 70% of all sawn softwood imports.
Topically relevant given the region from which it is imported, the largest of these grades is Dressed Coniferous Fir or Spruce. Imports lifted in 2021 to 240,700 m3, up a huge 70.6% or 99,000 m3 over the year. The weighted average price in December 2021 was AUDFob763/m3, more than double the weighted average price one year earlier!
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The main suppliers of this grade are Germany, Sweden and Estonia, as the chart here shows.
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The second most significant import grade is Dressed Coniferous Other (excl. Radiata), imports of which lifted 33.3% in 2021 to 162,439 m3. It has observably taken some time for imports of this grade, supplied mainly by Estonia, Lithuania and Sweden to begin to build, but by December 2021, monthly imports had lifted to 20,791 m3, their highest monthly total in 35 months.
At an average price in December of AUDFob760/m3, import prices were up an eye-watering 111% (and that’s not a typo!) on December 2020.
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The third of the significant import grades has been the Roughsawn Coniferous Other products. At 99,956 m3 in 2021, imports were up 60.5% on 2020 for a supply that is dominated by the Czech Republic and Poland. Once again, we can see that while supply growth has been solid and progressive, price growth has been little short of spectacular. At AUDFob650/m3 in December 2021, weighted average import prices were 72% higher than one year earlier.
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Demand and prices have continued to coincide in a manner that has supported very strong growth in sawn softwood imports. The demand still has considerable life in it and prices are therefore likely to stay high.
It must be assumed that given much of this import supply comes from close to where Russia is attacking the Ukraine, further disruptions are likely. We can anticipate delays and the maintenance of high prices for at least some of this supply over coming months.
