Global sawlog prices on the up and up

Global sawlog prices continued to rise in the March Quarter, with large increases recorded for some US sawlogs and all recorded Baltic sawlogs. The largest lifts appear to have been recorded for Washington Douglas Fir, the price of which rose an average 12.6% compared to the December quarter and in Europe for Estonian Pine, the price of which climbed 14.5% over the same period. Against a backdrop of solid global price growth, there are obvious flow-on effects for the Australian industry.

The chart below shows Baltic region pine sawlog prices over the last five years. Strong cyclical trends are evident, but there is no trend more dramatic than the rise in the price of Estonian Pine. The reported average price of USD94.81/m3 in the March Quarter of 2018 is 36.9% higher than in MQ’17 and a strong 14.9% higher than the prior quarter.

fig 17

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It is observably the Estonian price that has moved most dramatically. From MQ’17 to MQ’18, the average price of Norwegian Pine rose 11.9%, Swedish Pine a marginally stronger 14.4% and Finnish Pine 18.7%.

It is relevant to keep in mind that these are roadside prices, which adds haulage costs to deliver them to mills.

Some caution has to be exercised about the sustainability of the Estonian prices. They have risen quickly and are reported to be approximately USD22.50/m3 (31.1%) higher priced than the next highest priced (Finnish) sawlogs. We do not question the veracity of tis well regarded price series, but it is reasonable to ask if the price will be sustained for long, particularly as it has settled at almost exactly its prior peak, after which it fell more sharply than it rose.

North American Sawlog prices are also rising, but the experience appears to be more patchy than with the Baltic Sawlogs. Unfortunately, not all of the data is in for the March Quarter, but for the two grades that are available – Washington Douglas Fir and Washington Whitewoods – the price rises have also been significant.

Washington Douglas Fir prices rose 33.2% from MQ’17 to MQ’18, averaging USD125.38/m3 in MQ’18 and rising 13.3% from the December Quarter. For Washington Whitewoods, the annualized increase was 27.8%, with the price averaging USD98.05/m3 in MQ’18. These prices are delivered to mill door, so a haulage factor is included, making direct comparison more difficult to assess.

fig 18

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

Despite the jurisdictional differences, and the different price structures (roadside versus mill door delivery for instance), the trend toward price increases is clear and consistently large at a headline level.

With the cost of sawlogs rising globally, there are two obvious implications in Australia. First, sawlog prices will be under further upwards pressure in coming months. Second, imported sawn softwood prices should also be under upwards pressure. Combine the two factors and the price of wood supplied in the Australian market should be higher in coming months. That at least is what the sector’s fundamental data is telling us.

Within the FWPA Data Dashboards there are details of log pricing for these two major groupings, but also for US South Sawlogs as well as Baltic Region Spruce and Birch Sawlogs. To access this data, login to the Data Dashboard, Click on ‘International’ and go to the region you would like to explore. The charts and tables are fully downloadable.