Reflecting a general flattening of the building products market, prices for several key locally produced softwood products eased in the December quarter. Reflecting a long-term trend that favours the treated product, the weighted average price of Structural treated <120mm was steady with a 0.4% increase, while the Structural untreated <120mm was down 1.0%.
We could almost say ‘nothing to say here’ because the easing in major product prices is consistent with the easing of new demand (housing approvals) and with the increases in imports to complement local production.
The Structural Treated <120mm product is now the major product in the market, having bested its untreated rival over the last two to three years. The weighted average price rise of 0.4% equated to an Eastcoast average price of $857.24/m3, up less than $4/m3 on the prior quarter.
State data shows declines in SA (-0.8%), Queensland (-0.6%) and Victoria (-0.1%), with the weighted average price held up by NSW (+0.5%).
The situation was different for the Structural Untreated <120mm product. Its Eastcoast weighted average price declined 1.0% to $748.67/m3, with all State averages down between 0.5% (NSW) and 3.4% (Queensland), compared to the prior quarter.
For these two grades in particular, the charts are useful for comparative purposes. What they show in part is that the weighted average price differential between the treated and untreated structural products has been growing. In the December quarter of 2021, the Treated grade had an $85/m3 price advantage. That had grown to $109/m3 by the December quarter of 2022.
The product mix required and the states in which the sales occur will have something to do with this, but the healthy average differential in favour of treated product is one to watch.
Examining the larger dimension structural grades, the experience appears different over the last year and most recent quarter.
Structural Treated >120mm prices declined an average 1.8% to fall to $994.84/m3, with state declines from 1.5% to 3.7% in the December quarter. That said, and as the chart shows, to some extent, the weighted average price has come off its highest ever level and in the December quarter was still near its peak.
The bright spark for the December quarter was that the Structural Untreated >120mm product saw its price lift an average 2.2% to $870.44/m3, just below its all time peak set in the June quarter. Importantly, the price growth was built on volume stability and some sharply higher prices in NSW (+22.4%), but largely stable prices in other Eastcoast states.
In the short term, the ‘slide sideways’ for local sawn softwood prices is to be expected. One prospect is that sideways demand and a continuing pipeline of work will sustain sales volumes and production efforts, while inflation plays its part on prices.
