Local sawn softwood sales were relatively steady in July, amidst capacity constraints and supply chain limitations. Year-ended July, total sales were 4.53% lower than a year earlier, totalling 3.067 million m3. July itself saw sales total 258.0 km3, down around 13.0 km3 on the prior month.
Following on from fires, salvage and supply chain challenges, the latest battle for all sectors in the Australian economy is labour. An economy and supply chain wide challenge is certainly a factor weighing on the capacity to get product to market.
The chart here shows sales easing from the year-ending peak of 3.2 million m3 recorded in mid 2021. Some market softness may be evident, for some grades, but there is no slowing the main use: structural softwood for dwellings.
There has been a decisive shift in balances in the total supply of sawn softwood from Australian mills, over the last two years. There is certainly total supply of structural softwood to consider, but the steep decline year-ended July in Structural <120mm (-9.8% to 641.6 km3) and Structural >120mm (-5.6% to 65.4 km3) has not been offset to the same extent by the continued growth in their treated siblings.
As we can see below, Treated Structural <120mm lifted 1.5% to 738.4 km3 and Treated Structural >120mm rose 10.8% to 72.0 km3.
What might be just as notable is the pressure on local sales of other grades. Among the larger volumes reported by processors, Packaging grades sales were 5.1% lower at 647.8 km3 and Outdoor Domestic sales were 0.9% lower at 317.9 km3 year-ended July.
The only other grade to put on some volume was ‘Ungraded’, up 3.1% to 271.6 km3.
It might be that sales data is demonstrating general system constraints. That’s a capacity challenge that will not be easily addressed while demand remains very strong. Product mixes will necessarily come under scrutiny as demand softens and it will be fascinating to see the market results of that over the next two years or more.
