Australia’s domestically produced sawn softwood sales totalled 3.144 million m3 year-ended February 2021. Up 0.7% on the prior month and a very solid 10.0% on the prior year. It must be anticipated that at current rates of growth, sales will be at annualised records, by the middle of the year. The current result is particularly strong overall because of the couple of modest months at the onset of the pandemic. All but one grade recorded sales growth over the year.
Sawn softwood sales are shown in the chart below, in aggregate. The importance of this chart, in many respects, is that it shows month-on-month sales growing solidly, feeding into what is a relatively sharp rise in annualised sales. This is important because it comes directly off the back of the massive government stimulus program, the pipeline from which (read more elsewhere in this edition) looks to have at least two more years to run.
Annualised sales peaked in August 2018, at 3.177 million m3. The current rate of growth of an average 0.85% per annum will likely see that previous record be bested in May or June 2021. But – and it is a big but – that will only occur if the industry’s domestic production and supply chain has the capacity to meet that mark. We should be clear here – this is not about desire or capability – but whether the local industry has the equipment and logistics to deliver on the opportunity.
To go straight to the dashboard and take a closer look at the data, click here.
Drilling into the details, the second chart and the table below it, present the same sales, but on a grade-by-grade basis. They indicate that the growth (while not uniform) has been fairly consistent.
To go straight to the dashboard and take a closer look at the data, click here.
| Grade |
YE Feb ’20 |
YE Feb ’21 |
% Change |
| Outdoor Domestic |
245,494 |
301,016 |
22.6% |
| Fencing |
85,669 |
112,128 |
30.9% |
| Appearance |
14,823 |
22,783 |
53.7% |
| Structural <120mm |
692,637 |
732,202 |
5.7% |
| Structural >120mm |
56,323 |
60,211 |
6.9% |
| Treated Structural <120mm |
625,139 |
670,728 |
7.3% |
| Treated Structural >120mm |
48,139 |
53,696 |
11.5% |
| Landscaping |
122,330 |
142,629 |
16.6% |
| Poles |
36,244 |
41,320 |
14.0% |
| Packaging |
578,530 |
647,195 |
11.9% |
| Ungraded |
261,344 |
254,228 |
-2.7% |
| Export |
92,028 |
105,443 |
14.6% |
| Total |
2,858,700 |
3,143,579 |
10.0% |
The highlighted structural grades are important because in combination they account for 48.3% of all sawn softwood sales – more than 1.5 million m3 – over the year to the end of February.
But for all that we focus attention on the structural grades – rightly – there are other grades that deserve attention, of course. In particular, we draw attention this month to the 11.9% annualised growth in sales of Packaging graded materials like the industrial wides and wets, cut of log sawn dry and so on. This is the pallets, boxes and crates grade that makes extra value for some mills and represents almost all the value for other mills.
With sales at 647,195 m3 over the year-ended February, the grade accounts for almost 21% of total sales and is the third largest individual sales grade. Whether for domestic or international customers, the growth in this market must not be under-estimated.
In the chart below, we can see the relative annual sales of each of the three main sales grades: the two <120 mm structural grades and the packaging grade. We will not overdraw conclusions here, but the rise of the packaging grade has a lot to do with demand and just as much, perhaps, to do with processors understanding the best utility for the logs available to them, given the ‘shape’ of certain regional plantation estates.
To go straight to the dashboard and take a closer look at the data, click here.
Draw the dots between this cursory examination of the data and our commentary, and we begin to have some comprehension of exactly why the domestic supply of sawn structural softwood is under so much pressure in the current super-heated domestic housing market.
