Sawn softwood timber sales record of 3.125 million m3 YE Dec ’16 – forecasts say growth will continue

Continuing one of the heftiest and longest running sales growth paths, domestically produced sawn softwood sales punched-out another record in the year-ended December 2016, with sales totaling 3.125 million m3. For the month of December (the quietest each year), the data is almost as strong, up 6.3% on the prior December. 

These are strong sales results and despite them being relatively new, the ABARES Quarterly Softwood Data Series Forecasts indicate further sale growth is expected, but will be patchier and more muted as the housing construction  boom comes to its end.

As the chart shows, the year-end records have been falling almost continuously since the middle of 2015. Performance before then was by no means poor, it just dipped down for a few months. But that changed from the middle of 2015. So much so that by the year-ended 2016, total sales were 17.7% higher than a year before.

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The grade that delivered the most outstanding performance through much of the last few years is H2F, the termite treated grade.

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As the data shows, H2F sales dipped down in the December Quarter of 2016. This is never a surprise because of the seasonal nature of December sales. That said, because of the strong prior growth, the actual result was lower than expected and did take the most recent ABARES forecasts by surprise. But importantly, not by much. As the table below shows, the sales forecast for the December Quarter was 4.47% higher than actual reported sales.

As the table shows, the forecasts through to the end of 2017 suggest there will be growth in sales over the year. In 2017, December Quarter sales are forecast to be 3.3% higher than in the same quarter of 2016, totaling 191,969 m3.

Treated Pine H2F

The data in the table is depicted in the chart below.

In many respects, the growth in H2F sales has come at the expense of sales of the untreated <120 mm sawn softwood products. Statistics Count regularly addresses this issue, and it suffices here to present the chart showing the gradual decline in the once dominant <120 mm grade.

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While the decline in quarterly sales of <120 mm sawn structural softwood was relatively large in the December quarter (-9.2%), the ABARES forecasts were successful at identifying this was likely. The sales forecast for the quarter was just 2.35% higher than the actual, representing a good result for the forecasts.

The forecasts indicate that sales are scheduled to fall further in 2017, dropping 7.4% to total 168,330 m3 in the December Quarter of 2017. In short, if the forecasts in the table below are accurate, sales of <120 mm sawn structural softwood timber will continue to fall quite sharply.

The data in the table is depicted in the chart below.

Although it is a change of speed entirely, the third set of ABARES’ forecasts focuses on landscape wood product sales. Sales are typically at the end of the housing construction process, so in that sense they are quite different to the grades of structural framing that commence the building process.

The chart below shows the recent sales performance of the landscape grades.

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Solid growth in sales over the last several years has resulted in the forecasts being more optimistic than the actual, with the margin larger, in part perhaps because the volume of sales is relatively small, compared with the other grades. December quarter forecasts were 8.54% higher than the actual reported sales of 41,036 m3.

Forecasts to the end of 2017 indicate more solid growth is on the way for the landscape grades. In fact, if the forecasts are accurate, the growth over 2017 will amount to 17.6% to December 2017. This makes sense – a whole lot of houses have been built in recent years and there’s plenty of need for better landscaping out there! Whether that translates to such large growth as the forecasts suggest, remains to be seen.

The data in the table is depicted in the chart below.

Massive recent growth in domestic sales of sawn softwood has made the growth going forward more difficult to assess. At this early stage however, it seems fair to say that ABARES’ forecasts trend in the intuitively correct directions, are broadly within range and in some cases are actually very close.

If the forecasts are accurate, the long run of growth in sales must shortly come to an end. And that too seems roughly right, because of the softening in the housing market, if nothing else.