Sales of locally produced sawn softwood products totalled 231,886 m3 in February 2019, a lift of 21.2% on the prior month. Although January is always a quiet month and thus is relatively easily bested, the February sales data fed into annualized sales totalling 3.035 million m3 for the year, a decline of just 3.3% on a year earlier.
There is little doubt, as the chart below shows, that the last few months have seen monthly sales volumes fall short of their prior corresponding period, and as a result, head the annual total down.
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For example, in February 2019, sales were 13.1% lower than the 266,729 m3 recorded for February 2018 and month-on-month double-digit declines have been recorded for each of the last four months.
It is relevant to look at which sawn softwood grades have experienced growth and which have declined over the last year. The Statistics Count team holds to the view that there are often patterns in the sales data that can provide indications of what stage the housing cycle is at.
As the next chart shows, most grades, but not all, experienced declines over the last year. What is most evident is that the two largest volume grades – Structural <120 mm and Treated Structural <120 mm experienced declines, while Packaging and Ungraded products recorded large increases.
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Over the year-ended February 2019, just three sawn softwood grades exhibited any growth, as the table below details.
| YE Feb 2018 | YE Feb 2019 | % Change | |
| Outdoor Domestic | 256,707 | 241,844 | -5.8 |
| Fencing | 104,100 | 111,852 | 7.4 |
| Appearance | 18,234 | 14,516 | -20.4 |
| Structural < 120mm | 757,361 | 687,360 | -9.2 |
| Structural > 120mm | 67,250 | 57,723 | -14.2 |
| Treated Structural < 120mm | 745,657 | 692,672 | -7.1 |
| Treated Structural > 120mm | 59,874 | 50,772 | -15.2 |
| Landscaping | 156,264 | 147,049 | -5.9 |
| Poles | 33,169 | 32,861 | -0.9 |
| Packaging | 491,040 | 580,770 | 18.3 |
| Ungraded | 271,206 | 308,297 | 13.7 |
| Export | 177,959 | 109,195 | -38.6 |
| Total | 3,138,825 | 3,034,912 | -3.3 |
If we take this data as indicative of the total market, we could see that Fencing products (+7.4%) were in greater demand because the nation’s long tail of housing developments has reached the point where fences are being installed. That has a narrative seduction to it, because it would then explain perhaps why the main structural products all experienced declines larger than the average – their phase of the dwelling construction boom is over.
Regardless of the ease with which this narrative slips into the mind, there are however other factors at play in the market.
First, on the structural grades, the closure of the Morwell sawmill in late 2017 means less structural products have been produced and sold.
Second, though declining themselves, housing start data does not support a slump in total structural product consumption of around 9% suggesting some impact from the significant increase in import volumes evident over the past 6 months.
Third, despite its growth, Fencing product sales rose a relatively minor 7,752 m3 over the year, or just 0.26% of total sawn softwood sales for the year.
In short, we need be cautious about the conclusions we draw from the ‘some up’, ‘some down’ data that makes up current sawn softwood sales.
Returning to the solid growth in Packaging (+18.3% or almost 90,000 m3) and Ungraded products (+13.7% or just over 37,000 m3), this situation may reflect improved recovery of some logs, but it could also and in part, be indicative of a different application for logs that were previously processed at the Morwell sawmill.
That is, a decline in structural production because of unsuitability of some logs, may have contributed to a rise in production and sales of non-structural products.
Using the packaging product sales as an example, we can observe below that there was an increase in sales (compared with prior corresponding periods) from around the end of 2017, and flowing through to the most up to date data. Perhaps most telling is that every month’s sales over the last year have been higher than the corresponding month one year earlier.
To go straight to the dashboard and take a closer look at the data, click here.
The data however, remains inconclusive, other than that regardless of the supply-side drivers, this sales data represents specific demand for sawn softwood products.
With sawn softwood sales down a relatively minor 3.3% over the year-ended February, the anticipated hard landing is yet to come. Whether it will come at all, is entirely another question.
