Sure signs of the long-awaited easing continued in December, as reported domestic sales of sawn softwood products slumped 31.9% compared to the prior month and sales for 2018 fell 1.7% compared to 2017. Reported year-end sales totalled 3.057 million m3, while December’s reported volume of 151,985 m3 was the lowest monthly total since January 2013.
After rising to new annual peaks in recent years (3.177 million m3 year-ended August 2018), reported total sawn softwood sales are falling away rapidly, as successive months of year-on-year falls are recorded.
At both an annual and monthly level, this is very observable in the chart below.
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In December 2018, reported sales plunged 23.7% compared to December 2017, and were a staggering 32.0% lower than the prior month. It does need to be noted that this is a voluntary series and does not include all producers, so the inputs could be subject to a moment’s scepticism and perhaps even to later correction.
However, the next chart tells the most compelling story, in our assessment.
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In 2016, reported sales totalled 3.138 million m3, declining to 3.109 million m3 in 2017 and 3.057 million m3 in 2018. Peak production and sales are probably an element of this, but so too are the demand factors that appear to have fed into the monthly December report.
As the next chart shows, the grades of softwood reportedly sold over the last three years have been changing progressively.
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It is important not to overplay this point, but it is possible that any rapid fall in local sales could be linked to the grades being produced, as much as to aggregate demand.
If we examine the pie –chart below showing sales for 2018, we can see that half of all sales are structural grades, but that there are significant volumes sales for packaging and some other grades.
But as the table below shows, these proportions have not been cast in stone in recent years.
| Proportion of Total Sales by Grade | |||||
| 2014 | 2015 | 2016 | 2017 | 2018 | |
| Outdoor Domestic | 7.3% | 7.6% | 8.7% | 8.4% | 8.0% |
| Fencing | 3.6% | 3.3% | 3.0% | 3.2% | 3.8% |
| Appearance | 0.6% | 0.7% | 0.5% | 0.6% | 0.5% |
| Structural < 120mm | 28.6% | 24.7% | 24.1% | 24.2% | 23.1% |
| Structural > 120mm | 3.0% | 2.1% | 1.8% | 2.1% | 2.0% |
| Treated Structural < 120mm | 17.3% | 20.3% | 21.8% | 23.5% | 22.9% |
| Treated Structural > 120mm | 1.9% | 2.4% | 2.4% | 2.0% | 1.7% |
| Landscaping | 5.4% | 5.2% | 4.7% | 4.9% | 4.7% |
| Poles | 1.2% | 1.1% | 0.9% | 1.0% | 1.1% |
| Packaging | 15.0% | 17.9% | 16.1% | 15.5% | 18.4% |
| Ungraded | 8.6% | 8.9% | 8.9% | 8.5% | 10.2% |
| Export | 7.5% | 5.7% | 7.2% | 6.1% | 3.7% |
Rising sales of Packaging grades, softening sales of Structural grades and other fluctuations may all be playing a part in what appears to be a sharp drop-off in domestic sales of sawn softwood.
Drilling into the monthly data, we can see below that sales of the untreated Structural <120mm grade plummeted in December 2018. Sales fell to 30,858 m3, after stumbling the month before and having been twice as high just two months back in October 2018.
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Although, as the next chart shows, the Packaging grade experienced a decline in each of November and December, its sales of 34,156 m3 in December 2018 was not the low point over the two years displayed.
To go straight to the dashboard and take a closer look at the data, click here.
As a minimum, the different grades of sawn softwood are behaving a little differently to one another in this softening market. But equally, we might view the reported December data with some caution. Is it really likely that the Packaging grade’s sales exceeded those of one of the two main Structural grades?
Time will tell, because after all, one month is a data point, not empirical evidence.
