Structural grades lead Q2 price hikes

Structural grades of sawn softwood led the weighted average price hikes for local products in the June Quarter, according to latest data reported by producers to FWPA. The price hikes for structural products ranged from 11.6% to 21.6% compared with the same quarter in 2020.

Importantly, other grades, especially green and dry packaging products also fared well, with weighted average prices lifting 10.6% and 15.4% respectively in the widely expected price rally.

The fundamentals of demand and supply can be observed in this latest data, with the explosion in local demand synchronising with global demand growth that has seen benchmark North American lumber prices explode. Though the Australian market has not gone anywhere near the experience set by US lumber prices, as the chart below shows, record prices were achieved in the June quarter for all but one of the products in the survey.

To go straight to the dashboard and take a closer look at the data, click here.

Only the >120mm Structural Treated MGP Grades have any history of higher weighted average prices.

Record prices are no surprise in the globally superheated timber/lumber market. What may be a surprise is that the price increases have not been more significant in the Australian market.

Before examining the price table, it is worth examining some specific charts. The first here shows the structural grades in isolation. In general, the price uniformity is notable. Prices appear to move, generally, in a consistent manner.

However, we observe that the weighted average prices are recorded in cash terms, and in the absence of a deflation against CPI, it is worth examining the relative movements over time, to isolate any grades that see prices move differently.

The index chart here, provides that information.

Sawn Structural Softwood Weighted Average Prices: Q2’15 – Q2’21 (INDEX)

Source: FWPA

The index chart confirms the consistency between products, but also shows that those with the largest volumes – the <120mm products – experience the least variability over time. This is to be expected, with more observations available, greater volumes of sales and ultimately, more general market signals available to moderate price changes.

Final among the charts here, the non-structural grades are displayed. Again, despite the large differences shown in actual prices, there is a consistency in price movements for products as diverse as H3 External Treated and Green Packaging products.

To go straight to the dashboard and take a closer look at the data, click here.

The table here shows the recent price experiences and comparisons over time.