Due to a quirk in the ABS trade data system the trade data for September and October has just been released. The aggregate level for all softwood sawtimber products shows a continuation of the supply response underway since July 2017 with the annualised volume increasing from a low of 565,898m3 to reach 892,793m3 in October 2018. This supply response has been linked with strengthening prices during this period.
To go straight to the dashboard and take a closer look at the data, click here.
This supply response from imports has been important in meeting local demand. With local softwood production working at record levels so imports (refer article elsewhere in Statistics Count) imports continue to play a critical balancing role.
Interestingly when import volumes increased significantly following the GFC and peaked at 657,764m3 in March 2011 this was associated with weaker prices. At that time international markets were weak and any sales in Australia were seen as good business.
However the situation is very different today with improved markets in Europe and North America. US Softwood Lumber Production has recovered from the depths of 2009 when following the GFC, housing starts collapsed and annual production slumped to 23,420 million board feet and capacity utilisation of 58%. By comparison current production as at August 2018 was running at 34,883 million board feet with capacity utilisation at 86%.
The growing North American demand has also been associated with increasing prices which moved up to record levels in June 2018. As can be seen in the following graph prices have eased over the past 5 months and now appear to be rising again.
Weekly Lumber Prices North America
Source: Natural Resources Canada, Random Lengths, Madison’s Lumber Reporter
The improvement in European and North American markets means the traditional sources of softwood sawntimber imports for Australia have good local markets. Consequently to draw in import volumes Australia must pay effectively an import parity price reflective of the improved markets in Europe and North America.
The higher prices required to secure the additional import volumes is evident from further analysis of three key products which account for 69.7% of the softwood sawntimber imports. (Please note in addition to these 3 products the FWPA data dashboard covers all 19 softwood sawntimber imported products).
4407.11.10.40
Plain English description: Note: WOOD SAWN: Coniferous Dressed: Planed or Sanded: Other; Coniferous Untreated: Excl; Weatherboards, Radiata Pine.
To go straight to the dashboard and take a closer look at the data, click here.
| Description | 18M04 | 18M05 | 18M06 | 18M07 | 18M08 | 18M09 | 18M10 |
| Monthly | 28,159 | 27,490 | 27,328 | 31,200 | 36,168 | 30,929 | 34,066 |
| Year End (RHS) | 215,833 | 229,445 | 242,665 | 259,338 | 284,090 | 305,614 | 329,102 |
| AUD $ per m3 | $375.11 | $378.88 | $391.95 | $391.92 | $405.97 | $426.14 | $432.46 |
The volume increase has been significant with a big uptick in supply from Estonia, Germany and Sweden as can be seen in the country of origin graph.
To go straight to the dashboard and take a closer look at the data, click here.
4407.11.99.04
Plain English description: Note: WOOD SAWN: Pine not Radiata Roughsawn: Not planed or sanded: Other; Not cut to size for making staves: Having a cross-sectional area less than 120cm2:: Untreated; Pine but not Radiata Pine.
To go straight to the dashboard and take a closer look at the data, click here.
Whilst the volume of this product has eased slightly the price has strengthened significantly in recent months.
| Description | 18M04 | 18M05 | 18M06 | 18M07 | 18M08 | 18M09 | 18M10 |
| Monthly | 13,521 | 12,269 | 12,745 | 9,450 | 12,524 | 12,171 | 13,837 |
| Year End (RHS) | 138,199 | 137,015 | 140,757 | 140,871 | 138,352 | 142,695 | 146,244 |
| AUD $ per m3 | $370.16 | $381.77 | $384.79 | $384.72 | $400.44 | $444.50 | $447.03 |
The major volume is being provided by Czech Republic, Germany and Poland.
4407.12.10.13
Plain English description: Note: Coniferous wood of Fir or Spruce, Dressed.
To go straight to the dashboard and take a closer look at the data, click here.
| Description | 18M04 | 18M05 | 18M06 | 18M07 | 18M08 | 18M09 | 18M10 |
| Monthly | 11606 | 12,886 | 9,752 | 10,737 | 19,367 | 10,812 | 15,979 |
| Year End (RHS) | 114890 | 121,774 | 123,418 | 124,868 | 136,558 | 138,516 | 147,445 |
| AUD $ per m3 | $382.12 | $403.87 | $394.39 | $400.11 | $391.01 | $400.20 | $392.87 |
This is a new product code introduced in January 2017 and the country of origin data shows a significant increase in supply from Germany and Sweden.
To go straight to the dashboard and take a closer look at the data, click here.
All in all a big month for imports and it will be interesting to see in coming months if the market is now in balance at these levels.
