Monthly sawn softwood import record in January – 71,319 m3

Recent data shows that Australia’s imports of sawn softwood products are again on the rise, with imports in January 2018 recording a new monthly record of 71,319 m3. January was, moreover, the third successive month of large increases in Australia’s imports of sawn softwood products.

This is one topic of interest in the import data, and it is addressed below. The other issue is the source of those imports and how prices have moved in recent times.

Rising imports may be explained easily

The previous sawn softwood import record was achieved in April 2015, when 70,513 m3 of imports were received into Australia. At that time, Australia was in the midst of what was already its longest residential construction ‘upside’. The domestic industry was considered to be very close to full capacity, building activity had increased sharply and supply was generally tight.

The situation may be a little different with the current spike in imports, which is displayed in the chart below.

fig 19

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The latest rise likely has something to do with the closure of Carter Holt Harvey’s Morwell Mill earlier in 2017. The indicator of this appears to be the grades of timber being imported. 8While the array set out in the chart is a large number of grades, from November 2017 to January 2018, the grade that stands out is marked in orange – 4407.11.10.40 Dressed Sawn Softwood, (other than Radiata).

To examine imports further and to confirm the spike, the next chart presents only those grades for which there are significant import volumes, and only for the last year.

fig 20

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As outlined above, we can observe that the main growth in imports has been for Dressed sawn softwood (other than Radiata). This is code 4407.11.10.40. Over the course of the last year, imports have averaged 14,595 m3 per month, but if we remove the last three months, the average is just 12,078 m3 per month. The last three months have all been above the average and in addition, have grown progressively.

Other grades to experience growth over the same timeframe are Roughsawn Pine (other than Radiata) <120 mm (4407.11.99.04) and Dressed Spruce or Fir (4407.12.10.13).

It seems, on the face of it, reasonable to distinguish imports of the last few months as specifically related to an event – the mill closure – rather than some unexplained market situation.

What is of note is that given the classifications, none of these products has been imported from New Zealand, which remains, in aggregate the largest importer to Australia.

The imports themselves may be explainable, but what of the countries of origin and the prices of sawn softwood imports?


Import prices flat or down, on average

Examined on a long-term basis, average prices of imported sawn softwood have been quite stable over the last two year, as the chart below demonstrates. It shows both import volumes and average import prices, as well as prices of imported Spruce and Fir products (4407.12) and imported Other Coniferous products (4407.19). We could generally consider these to be the European (4407.12) and North American (4407.19) grades, though we accept that is a little crude.

fig 21

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So, looking beyond the grades and to country specifics may provide some insight into pricing structures and strategies for sawn softwood imports. We will examine imports from three ‘volume supplier’ countries: Canada, Estonia and Austria.

Canadian imports, shown in the chart below, have been patchy in volume terms over the last two years. Because of the variances in products being imported, the average price of imports has moved around more than might desirable to find a trend. However, as a distinguishing factor, supplies from Canada averaged AUDFob742.25, well above the average for all imported sawn softwood.

fig 22

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Estonian supply, displayed below, has grown sharply over recent months, in line with expectations outlined above, The major grade, and the growth, has been in 4407.11.10.40 Dressed pine other than Radiata grade. Of interest is that prices have not rebounded to their substantial heights of 2016. Instead, they have grown, but pulled (in Australian dollar terms at least) toward a seeming middle-ground for this structural framing timber. In January 2018, the average price of imports from Estonia was AUDFob352.65/m3.

fig 23

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The price trend is similar for Austria, shown in the chart below, over the last two years, at least through to early 2017 when the general pricing slump occurred. Since then, Austrian prices have tracked rapidly back to average AUDFob322/m3 in January 2018, rising even as the volume of imports rose.

Notably, the imports are entirely of the Dressed grades, other than Radiata pine – essentially, framing timbers.

fig 24

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Structural framing timber prices – at least from Europe – appear to be converging more than was the case in the past. Although they have risen, prices ex-Europe are significantly lower than those ex-North America.

As imports are likely to rise further in coming months, further scrutiny will be applied to pricing, both in Statistics Count and in industry, more generally.

These charts have been extracted from a customized dashboard on the new FWPA Statistics and Economics program portal. FWPA members can establish their own custom datasets and fully interactive charts on the website.