On­wards and up­wards for wood prod­uct im­ports

Australasian Timber - - IMPORTED TIMBER -

Im­ports of wood and wood prod­ucts to Aus­tralia were val­ued at a record AUD1.981 billion for the year ended March 2018, hav­ing risen 11.3% com­pared with the prior year. “Af­ter a short dip in mid 2017, the value of im­ports has con­tin­ued to rise, with lit­tle prospect of a de­cline, any time soon,” said John Halkett, Gen­eral Man­ager, Aus­tralian Tim­ber Im­porters Fed­er­a­tion. The chart demon­strates the mag­ni­tude of the rise in wood prod­uct im­ports over the last five years. From AUD1.170 billion for the yearended March 2013, five years later, im­ports are val­ued at close to AUD2 billion. Mr Halkett said that, al­though the value of im­ports was up in to­tal, dif­fer­ent grades have had dif­fer­ent growth ex­pe­ri­ences over the five years. “Over the course of the year to the end of March 2018, only two ma­jor prod­uct group­ings saw a de­cline in the value of their im­ports: Round­wood and Hard­wood Sawn­wood. All other grades ex­pe­ri­enced growth. Over the longer term of five years, just one grade, Trop­i­cal Sawn­wood, ex­pe­ri­enced a de­cline in the value of im­ports,” he said. The value of im­ports of Conif­er­ous Sawn­wood grew solidly over the course of the last year. “This has caused con­sid­er­able com­ment in in­dus­try, but ex­am­i­na­tion shows that there are other grades and prod­ucts for which the value of im­ports rose more, and from a larger base. This growth is closely as­so­ci­ated with fram­ing and struc­tural ap­pli­ca­tions and are linked to dwelling ap­provals and new build­ing ac­tiv­ity,” said Mr Halkett.

Cause for con­cern

How­ever, Mr Halkett also is­sued a note of warning ... “Higher soft­wood tim­ber prod­uct de­mand from all en­duse sec­tors in the United States in the com­ing years, and the prob­a­bil­ity that this de­mand will in part be sat­is­fied by re­gions cur­rently sup­ply­ing into the bullish Aus­tralian mar­ket, may have se­ri­ous im­pli­ca­tions for on­go­ing soft­wood sup­ply cer­tainty. “With the Aus­tralian build­ing and construction in­dus­try need­ing to be­come more re­liant on im­ported soft­wood tim­ber prod­ucts, climb­ing US de­mand for tim­ber po­ten­tially spells bad news for fu­ture im­ported soft­wood sup­ply,” he said. Ac­cord­ing to a just re­leased re­port: Fu­ture Sup­pli­ers of Soft­wood Lum­ber to the US Mar­ket – Sup­ply and De­mand Out­look 2017-2030, higher tim­ber prod­uct de­mand in the US will re­sult in con­tin­ued ex­pan­sion of sawmill ca­pac­ity in the US South and in­creased im­ports from over­seas, while Western Canada will re­duce its ship­ments into the US mar­ket. Mr Halkett said the joint ForestEdge and Wood Re­sources In­ter­na­tional re­port in­di­cates that US con­sump­tion of soft­wood tim­ber prod­ucts is likely to reach record-highs by 2030, re­sult­ing in ex­port op­por­tu­ni­ties for sawmills in Europe and Latin Amer­ica The re­port fore­casts that US soft­wood tim­ber de­mand will grow at an an­nual rate of 2.3 per cent through 2030, which will be higher than the re­ports pro­jec­tion of real GDP. The study sug­gests that US tim­ber con­sump­tion will reach an all-time high by 2030. A de­tailed anal­y­sis of the fu­ture con­sump­tion of soft­wood lum­ber in each of five US end-use cat­e­gories (res­i­den­tial hous­ing, ren­o­va­tions, non-res­i­den­tial construction, ma­te­rial han­dling and other) re­veals that the non-res­i­den­tial construction cat­e­gory will grow at the fastest rate and will in­crease its share of the to­tal soft­wood tim­ber us­age from just over 11 per cent in 2016 to al­most 14 per cent by 2030. Tim­ber con­sumed by the res­i­den­tial hous­ing sec­tor, in­clud­ing ren­o­va­tions, will con­tinue to ac­count for the al­most 70 per cent of the end-use mar­ket.

Ex­pan­sion of ca­pac­ity of sawmills

At an es­ti­mated soft­wood tim­ber pro­duc­tion cost of less than US$200 per cu­bic me­tre in 2016, the US South is one of the low­est cost sup­pli­ers of soft­wood lum­ber to the US mar­ket. This, com­bined with a sig­nif­i­cant ‘over­hang’ sup­ply of soft­wood saw­tim­ber as a re­sult of the Global Fi­nan­cial Cri­sis in 2008-09 and a ma­ture plan­ta­tion re­source, is ex­pected to con­tinue to fa­cil­i­tate a ma­jor ex­pan­sion of sawmill ca­pac­ity in the re­gion. The mar­ket share of Cana­dian tim­ber pro­duc­ers in the US is ex­pected to de­cline in the com­ing years, with the big­gest re­duc­tion oc­cur­ring be­tween 2017 and 2025. The out­look for avail­able log sup­ply to the sawmilling sec­tor will be dif­fer­ent in the two ma­jor tim­ber pro­duc­ing re­gions in Canada, with har­vest lev­els fall­ing sub­stan­tially in Bri­tish Columbia over the next ten years. Over­seas sup­ply of tim­ber prod­ucts to the US is fore­casted to in­crease both in vol­ume and mar­ket share by 2025, fol­lowed by a de­cline un­til 2030. Based on the study’s tim­ber sup­ply curve anal­y­sis, ma­jor sup­ply­ing re­gions are likely to in­clude Brazil, Chile, Ger­many and the Nordic coun­tries. The study projects a very strong re­bound in hous­ing starts, ren­o­va­tions and non-res­i­den­tial construction, so over­seas sup­ply will be cru­cial and reach a mar­ket share of over 10 per cent by 2030. Af­ter nearly two decades of real price de­clines of sawlogs in North Amer­ica and else­where, the com­bi­na­tion of a re­bound­ing US soft­wood tim­ber de­mand, con­straints on log sup­ply and re­duced ex­port pro­duc­tion in Western Canada, and con­tin­ued strong de­mand for soft­wood tim­ber prod­ucts from mar­kets in Europe, Asia and the Mid­dle East/North Africa re­gion, is ex­pected to push soft­wood log prices higher. So for Aus­tralia a com­bi­na­tion of fac­tors such as climb­ing US tim­ber de­mand, off­set to some de­gree by im­proved sawmilling ca­pac­ity, but im­pacted by de­clin­ing Cana­dian sup­ply and ex­panded im­ports from Nordic coun­tries, Chile and Brazil should be a se­ri­ous cause for con­cern in Aus­tralia. Plus these ex­ports cur­rently sup­ply­ing the Aus­tralian mar­ket are likely to favour US mar­kets when sup­ply ca­pac­ity short­ens, rather that more dis­tant and less com­mer­cially at­trac­tive mar­kets in Aus­tralia. This should as­sist in crys­tallis­ing think­ing about Aus­tralia mov­ing much more de­ci­sively to be able to sup­ply its own soft­wood tim­ber de­mand from do­mes­tic sources.

“The value of im­ports of Conif­er­ous Sawn­wood grew solidly over the course of the last year”

John Halkett.

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