Softwood timber sales down 1.0% year-ended January 2018

Sales of domestically produced sawn softwood products declined 1.0% over the year to the end of January, totaling 3,116,399 m3. Over the year, there were no stand-out products from a down-side perspective, but there was strength in expected areas, and some intriguing symmetry that may provide clues to future market direction.

With sales almost stable, there is little surprise that changes in sales from one year to the next were broadly in bounds. The smallest changes were experienced for the largest volume grades – as might be expected – and the largest changes were reserved for the smallest volume grades.

In some small way, the chart below displays this, but more importantly, it accentuates that the peak of sawn softwood sales was reached in early 2017, since which the decline has been very modest, although it does appear to be accelerating.

fig 16

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Turning to specific grades, those that declined and detracted from sales growth are shown in the chart below.

Grade Sales Volume YE Jan ’18 (m3) % Change on Prior Year
Structural <120mm 746,897 -1.79
Packaging 488,624 -2.63
Outdoor Domestic 259,166 -4.80
Ungraded 265,673 -5.03
Treated Structural >120 mm 62,327 -17.39
Export 186,215 -17.99

As the table shows, the untreated Structural <120 mm grade experienced a modest decline in sales over the year, but at approximately 14,000 m3, the fall is not insignificant. It is all the more relevant because as the second table (below) shows, its treated counterpart continues to experience sales growth. In fact, sales of Treated Structural <120 mm totalled 737,853 m3 for the year-ended January and on trend, surpassed their untreated counter-part in February 2018.

Most of the grades experiencing declining sales, saw softening, rather than slumps, but two grades stand out, especially the Treated Structural >120 mm, which unlike the smaller sized Treated Structural <120 mm, saw its sales fall almost 18% over the year.

This is a curious decline, because the fall to 62,327 m3, comes alongside the untreated Structural <120 mm grade experiencing a rise in sales of 17.09% to a remarkably similar 66,546 m3. The symmetry in the two products (which are the same, except for the treatment) suggests a development in the market that the data alone cannot make clear. 

Grades that experienced sales growth are detailed in the table below.

Grade Sales Volume YE Jan ‘18 % Change on Prior Year
Landscaping 153,287 4.30
Fencing 100,257 6.13
Treated Structural <120 mm 737,853 6.73
Structural >120 mm 66,546 17.09

In some respects, the Landscaping and Fencing grades are similar, though not necessarily the same products. Their growth comes as the long tail of the residential housing expansion continues to whip the economy. Residual strength in free-standing dwelling approvals, where the yards are larger and the fencing is longer, will see these grades continue at higher levels for some time to come.

But the real interest remains in the structural grades, where there is a remarkable symmetry in play.

 Combined, the smaller diameter Treated Structural <120 mm and untreated Structural <120 mm probably have equal annualized sales right now. Combined, for the year-ended January 2018, sales totalled 1.483 million m3, accounting for almost 48% of total sales. The chart below shows the two products’ growth over the longer term – since this data series commenced in fact.

fig 17

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The relationship between the growth in these products is quite clear, but less clear is the relationship of growth in their heavier-weight counter-parts, discussed earlier in this item. We can see this in the chart below.

fig 18

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There are times when circumstances coincide to create their own interest. The long run FWPA Sawn Softwood Sales data series is providing that interest right now, demonstrating that the patterns of growth in treated structural timber are strong and continuing, but not without their specific and periodic curiosities.