Spot­light on ply­wood

Aus­tralia’s ris­ing con­sump­tion of ply­wood is in­creas­ingly be­ing fu­elled by im­ports, even as con­sump­tion of other prod­ucts lan­guish.

Australasian Timber - - NEWS -

FOR THE year-ended June 2014, In­dus­tryEdge anal­y­sis demon­strates, as re­ported in the re­cently re­leased For­est & Wood Strate­gic Re­view, that ap­par­ent con­sump­tion of ply­wood in Aus­tralia was 546.5 km3, a rise of 6.1% on the prior year. As the chart be­low shows, de­mand has grown in Aus­tralia, over the last decade, by an av­er­age 3.5% per an­num.

The sig­nif­i­cance of this sta­ble growth is im­por­tant for two rea­sons.

The first, im­me­di­ately ap­par­ent in the above chart, is that a sig­nif­i­cant pro­por­tion of de­mand is met by im­ports. In 2014, that pro­por­tion was 52.5% or 287.2 km3, with all of the ma­jor grades or for­mats of ply­wood be­ing well rep­re­sented in the im­ports.

The sec­ond el­e­ment of that sta­bil­ity is less ob­vi­ous and is re­flected in the sim­ple chart be­low, show­ing rel­a­tive growth rates of the ma­jor tim­ber build­ing prod­ucts over the last decade. It ex­em­pli­fies, in the sim­plest pos­si­ble way, that of all of the rel­e­vant tim­ber build­ing prod­ucts, ply­wood is on the rise.

In the con­text of grow­ing de­mand, and of course, the cur­rent hous­ing boom, the dif­fer­en­tial growth be­tween tim­ber build­ing prod­ucts is cause to pause for thought.

As the ‘high rise’ pro­por­tion of do­mes­tic hous­ing grows, many tra­di­tional tim­ber build­ing prod­ucts (eg. Sawn­wood) have found they have lit­tle role in the new hous­ing for­mats. Not so for ply­wood, which in­cludes en­gi­neered tim­ber beams such as LVL and other prod­ucts that com­pete well against their high rise com­peti­tors, alu­minium, steel and even con­crete. The driver for their growth has demon­stra­bly been in­no­va­tion that can be wrapped up in the con­cept of ply­wood prod­ucts be­ing part of the pan­theon of ‘en­gi­neered’ prod­ucts. The im­pli­ca­tion is that their suc­cess is di­rectly linked to the ex­tent to which they have been trans­formed in or­der to de­liver a so­lu­tion for a spe­cific pur­pose or need.

In­dus­tryEdge is reg­u­larly asked for up­dated data on ply­wood pro­duc­tion and wood pan­els op­por­tu­ni­ties in Aus­tralia. There is a gen­eral recog­ni­tion un­der­ly­ing most of those in­for­ma­tion re­quests, that ply­wood pro­duc­tion rep­re­sents an op­por­tu­nity that has been un­der-ex­ploited. Yet, as the in­dus­try of­ten dis­cusses, few of these as­sess­ments end in in­vest­ment. Ta Ann’s new fa­cil­ity, at Smith­ton in Tas­ma­nia, is the ex­cep­tion.

While it is true that many more in­vest­ments are con­sid­ered than pro­ceed in any sit­u­a­tion, we need to ex­am­ine the con­di­tions that lead to the neg­a­tive con­clu­sions, as much as those that lead to the pos­i­tive con­clu­sions and re­sult in an in­vest­ment pro­ceed­ing.

Reg­u­lar chal­lenges to ex­pan­sion of ply­wood pro­duc­tion in Aus­tralia, ex­pressed by in­dus­try, in­clude the dis­ag­gre­ga­tion of ad­e­quate vol­umes of suit­able wood sup­ply and con­cerns about se­cu­rity of ac­cess to sup­ply. The lat­ter is pri­mar­ily a con­cern about re­source from na­tive forests, but is not ex­clu­sively so.

The other is­sue reg­u­larly com­mented upon is the ex­tent of ag­gres­sive, price driven and some­times sub-stan­dard com­pe­ti­tion from im­ports, es­pe­cially from Asia. It is a com­mon re­frain, but it is all the more sig­nif­i­cant be­cause there are reg­u­lar in­ves­ti­ga­tions that demon­strate just how low qual­ity some of the im­ported prod­ucts are.

Oth­ers point to do­mes­tic pro­duc­tion that has grown 3.9% per an­num over the last decade (slightly ahead of the pace of con­sump­tion growth). The ar­gu­ment goes that in­vest­ing to re­duce the im­pact of im­ports is the start­ing point, and not the end

“Which­ever op­tion you pre­fer, the data sug­gests that there are op­por­tu­ni­ties for ply­wood pro­duc­tion in Aus­tralia.”

of the process. For the chal­lenges of im­ports to dis­si­pate, the do­mes­tic in­dus­try must have ca­pac­ity to sup­ply the mar­ket that is ca­pa­ble of win­ning mar­ket share.

This is not just a ques­tion of prod­uct stan­dards and spec­i­fi­ca­tions, though it cer­tainly is that, it is also a ques­tion of sheer ca­pac­ity and in­vest­ment to de­liver it.

Which­ever op­tion you pre­fer, the data sug­gests that there are op­por­tu­ni­ties for ply­wood pro­duc­tion in Aus­tralia. What is most sig­nif­i­cant is that they may be bet­ter op­tions than ex­ist for tra­di­tional sawn­wood prod­ucts.

Tim Woods is Man­ag­ing Direc­tor of In­dus­tryEdge, Aus­tralia’s lead­ing mar­ket anal­y­sis firm in the forestry and wood prod­ucts sec­tor. The firm is pub­lisher of the monthly Wood Mar­ket Edge and the bian­nual For­est & Wood Strate­gic Re­view. The 2015 edi­tion of the Strate­gic Re­view has just been re­leased. Go to www.In­dus­ or call +61 3 5229 2470.

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