Massive log exports deliver new record

In February 7, 2017

Australia’s log exports continue to rise, surprise and cause some concerns. Latest trade data shows that in 2016, exports of softwood logs totaled a massive 3.614 million m3, up 20.7% on the prior year. Over the same period, exports of hardwood logs rose a solid 11.1% to a new record of 0.352 million m3.

Perhaps the most notable feature, easily observed in the chart below, is the near continuous rise in quarterly exports over the last four years. So strong have exports been that the obvious record in the December Quarter, saw exports top the 1 million m3 mark for the first time, totaling 1.121 million m3.

The surprise for the quarter, at least with respect to the softwood exports was that they were very consistent across the three months, implying that the export market has shifted up a gear.

But the concern, we think inevitably, is whether exports are placing pressure on the sustainability of supply to domestic sawmills, panel mills and pulp and paper facilities. We are not offering an answer as to the extent to which this is a problem at this time, but we note concerns that have been repeated to us regularly in recent months.

One factor that clearly plays in favour of exporting is the recent rises in average prices for softwood logs. In the December quarter, the average price jumped to a new record of AUDFob134.94/m3. That means the total quarterly trade was valued at AUD151.3 million, which amounts to a lot of reasons for exporters to be working their opportunities as hard as possible.

Although hardwood logs also saw records set, there are few, if any similar concerns to those expressed about the softwood log exports.

As can be seen in the chart below, hardwood log exports recorded an annual record in 2016, rising by 11.1% on the prior year, but at 0.352 million m3 for the year, exports are of interest to most, but of concern to few.

Since the US Presidential election, the US Dollar has depreciated against currencies like the Australian Dollar. Whether that places downwards pre4ssure on higher priced exported logs remains to be seen, but the evidence suggests it may have a dampening effect for a few months.

After an incredible December quarter, only time will tell. You can keep up to date with the latest analysis through our monthly publication, Wood Market Edge.

To keep up to date, go to www.industryedge.com.au and register for ‘Free Stuff’.

Reprinted by agreement with IndustryEdge, the publisher of the monthly, subscription only Wood Market Edge and Pulp & Paper Edge. Go to www.industryedge.com.au for further updates and complimentary resources.

 

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