No end in sight for mas­sive chip ex­ports

Australian Forests and Timber - - IN THE NEWS -

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

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