Softwood imports continue to decline

Easing of market conditions may be reflected in sawn softwood timber imports which totalled 39,535m3 in January 2023. This is the second lowest January result for the six years from 2018 and includes a decline of 41% on imports in December 2022.

Although it is important not to treat a month – a seasonally low month at that – as the be-all and end-all for analytical purposes, it is a further indication of a softening and smoothing of demand and supply balances that have been very messy for the last two years. An indicator of that is that on a year-end basis, in January 2023, imports totalled 951,590 m3, up 35.5% on a year earlier.

Moderating perhaps, but the annualised volume tells the story of a solid market continuing its strength, for now.

Even more than volumes, the price of imported sawn softwood timber – and also local prices – have been disrupted from their traditional trajectory over the last few years.

After retreating in December, weighted average import prices in January were up 6.3%, with prices oscillating between AUDFob750/m3 and AUDFob850/m3. Prices may be off their all time peaks, but not by much, and of note, as shipping and freight costs decline to sensible levels, the free-on-board (goods alone) price is holding up well.

Four specific import codes provide the bulk of the imports. Notably, almost all the imports – and the growth for some of these grades – is structural. These imports are supporting the domestic structural supply, and in some instances, growing massively to do so.

It is important to note that in most cases, the distinctions between these ‘products’ as the trade system defines them, is modest and may not be observable in the market – different sub-species, variations in end dimensions and so on.

Supplies continue to be dominated by Germany, with excellent support from Estonia, Lithuania, New Zealand and Sweden. Essentially, the import trade remains Western Europe and local supplies and there is little to no prospect of that changing.

The table below allows for some consideration of relevant matters. There has inevitably been scrutiny of shipments from Mainland China to see whether there is a significant uplift in movements that could – as it might be – perhaps be linked to increased shipments from Russia to or through China. The short answer is there is no evidence of that in the data below.

Returning to the theme of import classifications, as the chart below shows, sometimes a dramatic fall is observed, that requires a little investigation to understand. A small warning: this is information for the analysts and data pointy heads (and nerds like us), so it’s a bit dry.

The import code 4407.11.99.08 saw its volume peak in the 2018 housing cycle at 150,936 m3 year-ended November 2018. It has since steadily declined to 25,590 m3 year-ended January 2023.

As we mentioned in the previous issue of Statistics Count the decline has mainly resulted from supply from the Czech Republic and Poland. Investigations suggest the volume has been redirected/categorised and now appears to be covered in the import codes 4007.11.99.15 and 4407.12.10.16.

Now, you may (or may not) want to know why this would happen? Change of sub-species, change of dimensions, alteration of technology, had the codes wrong and a Customs authority gave the importer a clip over the ear. It is hard to know, but important to work out where the volumes ‘went’, in order to get a fuller picture of total trade.

Another product reflecting the greater detail available since the upgrade of the international trade codes in January 2022 is 4407.14.10.11. This new product category covering Coniferous wood of Hem-fir, Dressed which was previously included in 4407.12.10.16 and has since been separated.

Whilst only a relatively small volume in the year-ending January 2023 (8,675m3) it is interesting to note that the country of origin is all Canada.