Fact Checker! Change in Softwood Import prices for April/May up or down?
It has been a rollercoaster 3 months for softwood sawn timber imports prices or has it? A statistical sleight of hand has seen the headline AUD $ customs value price represented by HTISC 4407.10 fall 18.2% in April and rise 21.0% in May.
So, have prices really changed? Normally such a significant change in the headline rate would suggest big changes in the market place are being experienced. However as is often the case with data the situation is more nuanced when you drill down into the detail.
Softwood imports 4407.10 are covered by 20 detailed HTISC codes (agreed international product definitions). Of these products 5 cover over 90% of the volume which can be seen in the following table.
In April, total volume imported was 39,055m3 and the weighted average aggregated AUD customs value per m3 for all 20 products was $436.90. This compared to May where total volume was 34,032m3 and the weighted average AUD customs value was $526.61.
While the five key products were in total 29,021m3 in May three products represented close to 80% of the volume. These were
|
HTISC Code |
Tariff Description |
Plain English description |
|
4407.11.10.40 |
.Other |
Note: WOOD SAWN: Coniferous Dressed: Planed or Sanded: Other; Coniferous Untreated: Excl; Weatherboards, Radiata Pine |
|
4407.11.99.04 |
..Other |
Note: WOOD SAWN: Pine not Radiata Roughsawn: Not planed or sanded: Other; Not cut to size for making staves: Having a cross-sectional area less than 120cm2:: Untreated; Pine but not Radiata Pine |
|
4407.12.10.13 |
--- Planed or sanded |
Note: Coniferous wood of Fir or Spruce, Dressed |
As can be seen in the following chart the contribution of these three products to the weighted average price in April and May was significant. In May the contribution of 4407.11.10.40 was $114.75, the contribution from 4407.11.99.04 was $$65.77 while the contribution from 447.12.10.13 was $93.98.
Fig. 12
The complexity here is that the contribution from these products when translated across all of the other 17 products generated the aggregate price volatility which was experienced.
However as can be seen in the following table the actual change in these 3 products for the month of May was relatively small ranging from +0.4% for 4407.11.10.40 to +3.9% for 4407.12.10.13.
|
|
2020M04 |
2020M05 |
% change |
Volume previous month |
Volume current month |
|
4407.1 |
$436.90 |
$526.61 |
20.5% |
39,055 |
34,032 |
|
|
|
|
|
|
|
|
4407.11.10.31 |
$839.76 |
$1,041.19 |
24.0% |
1,823 |
2,649 |
|
4407.11.10.40 |
$345.53 |
$346.81 |
0.4% |
17,806 |
11,113 |
|
4407.11.99.02 |
$742.33 |
$915.62 |
23.3% |
786 |
101 |
|
4407.11.99.04 |
$359.30 |
$371.69 |
3.4% |
4,511 |
5,943 |
|
4407.12.10.13 |
$329.68 |
$342.55 |
3.9% |
10,138 |
9,215 |
|
4407.10 Other |
$1,046.91 |
$1,244.01 |
18.8% |
3,496 |
4,567 |
What might this mean for a customer? Well if you purchased all of the 20 products that contribute to 4407.10 in the same volume ratio as imported in April then you would expect the total cost of those goods to be 18.2% lower while in May the same parcel of goods would cost 20.5% more.
To appreciate how unlikely that is, you would be purchasing specialised treated pine products for $1,689.87per m3 (4407.11.99.01 May volume 517m3 weighted at 0.015) along with your structural timber for $346.81 (4407.11.10.40 May volume 11,113m3 weighted at 0.330) to arrive at such an outcome.
So, in summary, a small change in three products that represent close to 80% of the volume has translated to a significant change in the headline percentage variation in the months of April and May.
