No end in sight for massive chip exports
Record woodchip shipments appear to have no end in sight, with exports for the yearended September 2016 totaling almost 6.7 million bone dry metric tonnes, almost 15% higher than for the year-ended September 2015. Hardwood chip exports totaled 6.3 million bone dry metric tonnes and are displaying every sign of recording further records well into 2017.
Although shipments to Japan – once the sole market for Australian woodchips – have continued and are stable, since mid 2013, all eyes have been on China. Its demand for Australian hardwood chips in particular, to fuel its pulp mills and paper production, has grown strongly and shows no sign of abating, as the chartin Figure 1 shows.
It is important to note that data for October is based on ‘at sea’ woodchip vessel tracking, uniquely undertaken by IndustryEdge and reported exclusively in the monthly publication Wood Market Edge. That data provides the industry with up to ten weeks’ lead time on shipments and hundreds of historical vessel movements on which reliable demand and supply forecasts can be made.
Thinking of China on its own, the quarterly data in the next chart shows that Australia’s woodchip deliveries to it topped the 1 million bone dry metric tonne mark for the first time in the September quarter of 2016 (See figure 2)
The emergence of shipments of softwood chips to China has proved to be an element in pushing exports above the ‘magic million’ mark in the September quarter. Just three years ago, in the September Quarter of 2013 (SQ’13), Australia’s total shipments to China were 368,790 bone dry metric tonnes, just 34% of the deliveries of 1,082,000 bone dry metric tonnes in the September quarter of 2016.
The woodchip export lift, in total, equates to something close to 13 million green metric tonnes of wood, a rise of approximately 1.5 million tonnes on the previous year. When we think about these export volumes, we need to keep in mind, as the chart below shows, log exports are also booming.
Driven by continual growth in softwood log exports, total exports were a record 3.7 million m3 in the year-ended September 2016. This amounts to a rise of more than 25% compared with the prior year (See figure 3).
While the log exports are important in their own right, it is when combined with the woodchip exports that they are truly significant.
With a supply chain that seems flat out right now, bottlenecks are inevitable. We observe them occurring at several points, most noticeably when vessels wait outside ports to be loaded. However, there are other constraints, including access to suitable yarding and handstands near ports around the country.
There is no immediate end in sight to these record exports and the pressures they place on supply chains. But, there are medium to long term resource constraints, for both domestic production and export. They will start to make themselves felt in tightening of supply, though that will not be for some time to come.
■ Figure 1. Australian Woodchip Chip Deliveries by Country: Jan ‘ 13 – Oct ’16 (e) (kbdmt) Source: GTIS, Fleetmon and IndustryEdge estimates
■ Figure 2. Woodchip Deliveries to China, by Species: MQ’13 – SQ’16 (kbdmt) Source: GTIS