Wood Market Edge

EDITION 62: December 2018

Wood Market Edge

New data - Structural softwood consumption up 30.2% in October, on month-on-month basisAustralia’s apparent consumption of sawn structural softwood was 30.2% higher in

October 2018, than in October 2017, new analysis from IndustryEdge demonstrates.

At 210,185 m3, apparent monthly consumption was lower than the record set in

August 2018 (237,773 m3).

The data, shown in the chart below, is drawn from multiple sources, including import

and export data, coupled with summary sales data. The term ‘apparent consumption’

is a reflection of the fact that we do not have inventory data that is the final piece in

the consumption jigsaw.

Australian Structural Softwood Apparent Consumption: Jan ‘17 – Oct ’18 (‘000 m3)

Source: ABS, FWPA & IndustryEdge

As subscribers will find later in this edition of WME, apparent consumption of total

sawn softwood in October, was 402,076 m3, on our definitions. That implies just over

52% of total monthly apparent consumption was structural grades. The chart below

shows this ratio since January 2017.

Seasons greetings and thanks for your supportAs a buoyant 2018 draws to a close, so too is the long-running housing construction boom winding down. It seems orderly right now, but that could soon change. Meantime, sawn softwood consumption is at all time highs and local production of logs, woodchips and sawnwood are all at or near their peaks.

The fundamentals are right for wood and wood fi bre now and into the future, so we can all hope for continued strength in Australia’s forestry and wood products economy.

From all of us at IndustryEdge, thank you for your support, and we look forward to working with you again in 2019.

In This Edition

Woodchips

Logs

Sawnwood

Plywood, Wood Panels & EWP’s

Housing & Construction

Economic Briefi ng

Pulp Market Briefi ng

Shipping & Freight Briefi ng

Wood Market Snapshot

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

18-50

0

50

100

150

200

250

'000

m3

Month

Sales

Exports

Imports

Consumption

2© IndustryEdge Pty Ltd For Subscribers only

Australian Structural Softwood Apparent Consumption Ratio: Jan ’17 – Oct ’18 (%)

Source: ABS, FWPA & IndustryEdge

On average, since January 2017, the monthly ratio of structural softwood consumption has

been 54.0% and was 52.3% in October 2018. The monthly ratio peaked at 63.5% (February

2018) and was at its lowest at 49.4% (June 2018).

At the total consumption level, the monthly datasets allow for analysis on criteria including

structural softwood dimensions and whether the products are treated.

This is a consistent dataset and can be replicated each month and analysed over different

time periods and from different perspectives. We expect future analysis will correlate this data

with dwelling approvals and commencement information, for instance.

This dataset will now be added to the monthly reporting in Wood Market Edge, adding to the

existing analysis of total monthly sawn softwood consumption. The detailed data, contained

in a stand-alone file, is currently undergoing advanced testing and refinement before being

added to the files available to subscribers

Woodchips

Exports average approximately 600,000 bdmt per monthAustralia’s woodchip exports will average 600,172 bone dried metric tonnes (bdmt) in calendar

2018, according to IndustryEdge’s latest analysis. Although export data is only current to the

end of October, deploying port-to-port vessel tracking provides an accurate prediction of

total exports for the full year.

IndustryEdge’s projection is that for calendar year 2018, woodchip exports will total 7.202

million bdmt, up 6.3% on 2017.

Wood Market Edge is a complimentary additional information service for subscribers to IndustryEdge data services.

Stand alone subscriptions to Wood Market Edge are AUD300 plus GST per annum.

For subscriptions, contact [email protected] or call +61 3 5229 2470.

We welcome alternative views on topics addressed in Wood Market Edge. Feel free to contact us with your experience. Call +61 (0) 3 5229 2470 or email [email protected]

Wood Market Edge is published monthly by IndustryEdge Pty Ltd

ABN 39 109 201 630

Email: [email protected] or go to www.industryedge.com.au

Wood Market Edge is available in PDF.

Subscription enquiries should be directed to IndustryEdge P/L.

Phone: +61 (3) 5229 2470 Email: [email protected] mail

IndustryEdge P/L, PO Box 7596, Geelong West Victoria 3218, Australia.

Jan-2017

Apr-2017

Jul-2017

Oct-2017

Jan-2018

Apr-2018

Jul-2018

Oct-2018

0%

10%

20%30%

40%50%

60%

70%80%

90%100%

Percent

Month

Structural

Non-Structural

© IndustryEdge Pty LtdFor Subscribers only 3

Fig 1: Australian Woodchips Exports: Jan ’14 – Dec ’18 (p) (kbdmt)

Source: ABS, GTIS & IndustryEdge estimates

Figure 1 displays the details of total exports on a monthly basis.

For the period for which confi rmed export data is available – the year-ended October 2018 –

exports totalled 7.368 million bdmt, up 11.7% on the prior year.

Hardwood chip exports totalled 6.656 million bdmt (90.3% of the total) over the period. Due

to the application of confi dentiality restrictions during the period from March 2016 to May

2017, it is not possible to confi dently calculate the growth in annual softwood chip exports.

In October, hardwood chip export prices averaged AUDFob210.87/bdmt. In US dollar terms,

hardwood chips averaged USDFob149.40/bdmt. Softwood chip export prices averaged

AUDFob215.16/bdmt.

The table below shows Australia’s woodchip exports for October, and IndustryEdge’s

November estimate and December projection.

October Woodchip Export

NovemberWoodchip Export Estimate

December Woodchip Export Projection

618,587 bdmt (Hardwood)

592,071 bdmt 567,328 bdmt60,697 bdmt (Softwood)

679,284 bdmt

Source: ABS, IndustryEdge research and application of Despatch to Shipment Ratio.

An additional vessel left Australia’s ports in October 2018, pushing woodchip exports up

for the month. Our estimate for November and projection for December are very similar, at

592,071 bdmt and 567,328 bdmt respectively.

Both November and December are solid export months, without being spectacular. However,

there is no prospect of a slow-down in the market over the next year, with traders in our

conversations all reporting demand in excess of supply.

The IndustryEdge Despatch to Shipment Ratio MethodWoodchip export estimates and projections are based on unique analysis conducted by

IndustryEdge. The method involves tracking approximately 200 separate vessels and calculating

the gross vessel weights (Grt) of the ships that have left or will shortly leave Australia.

Monthly aggregate Grt of departing ships has been divided by the Despatch to Shipment ratio

to deliver estimates of woodchip export volumes, measured in bone dried metric tonnes (bdmt).

The Despatch to Shipment Ratio currently stands at 58.3%. This ratio compares the Grt with

the aggregate exports recorded by the ABS. The ratio now has 63 months of observations of

May

-201

4

Apr-2

015

Mar

-201

6

Feb-2

017

(e)

Jan-

2018

Dec-2

018

(p)

0

100

200

300

400

500

600

700

800

kbdm

t

Month

Woodchips

12-Month average


more than 1,285 vessels movements on which to rely. It is stable and rarely moves, appearing

to have settled over time as more observations joined the data series.

The ratio will remain close to 60.0% while ever the proportion of softwood chips remains

relatively small. Monthly ratios can and will change based on the proportions of each species.

However, over time, the ratio is exhibiting a reliability that now sees IndustryEdge only re-

assess it where there have been signifi cant changes in species proportions.

Figure 2 displays the key data points for the Despatch to Shipment Ratio on a month-by-

month basis.

Fig. 2: IndustryEdge Despatch to Shipment Ratio: Jul ’13 – Oct ’18 (Grt, bdmt & %)

Source: ABS and IndustryEdge research

November’s chip deliveries estimated at 666,861 bdmtAustralia’s woodchip deliveries for November 2018 are estimated to have reached 666,861

bdmt, in a solid delivery month that saw shipments to China total 419,250 bdmt (17 separate

vessels) and those to Japan reach 200,819 bdmt (8 vessels). Shipments to Taiwan totalled

46,792 bdmt, on two vessels.

For December, current projections are that deliveries will total a modest 506,766 bdmt, with

shipments to China totalling 270,584 bdmt and those to Japan reaching 236,182 bdmt. There

is reasonable prospect of additional ships reaching Chinese and Japanese ports before year

end, but at the time of writing, in mid-December, these are excluded from this analysis until the

deliveries are more certain.

BB

B

BBBBBB

BB

B

BBBB

B

B

B

B

B

BB

B

B

BBB

B

BB

BB

B

B

B

B

BB

B

B

BB

B

B

BB

BB

B

B

B

B

B

B

BBB

B

BB

BB

B

J

J

J

J

JJ

JJJJJ

J

J

JJ

J

J

J

J

J

J

JJ

J

J

JJ

J

J

JJ

J

J

J

J

J

J

J

J

J

J

J

J

J

J

J

JJ

J

J

J

J

J

J

J

J

J

JJ

J

J

J

J

J

Oct-2

013

Aug-2

014

Jun-

2015

Apr-201

6

Feb-2

017

Dec-2

017

Oct-2

018

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000

1,400,000G

rt

Month

BExport bdmt (ABS)

J Gt (shipped)


The detailed data is displayed in Figure 3, and includes estimates for China.

Fig. 3: Woodchip Deliveries by Country of Destination: Jul ’13 – Dec ‘18 (p) (kbdmt)

Source: GTIS & IndustryEdge research Note: China’s fi gure is an estimate from April 2018

Australian Woodchip Deliveries by Country of Destination: Oct ‘18 - Dec ‘18 (e) (bdmt)

Country Oct ‘18 Nov ‘18 Dec ‘18

China 236,232 419,250 270,584

Japan 285,035 200,819 236,182

Taiwan 23,262 46,792 _

Korea 28,986 – –

Indonesia 27,118 – –

Total 600,633 666,861 506,766

Source: GTIS & IndustryEdge estimates

Woodchip prices settle into new average pricesAustralia’s hardwood chip export prices increased to AUDFob210.87/bdmt over October

2018. Average prices were higher across the board, with exports to China priced at an

average AUDFob202.54/bdmt and to Japan at an average AUDFob223.05/bdmt.

Fig. 4: Hardwood Chip Export Prices to China by Port of Delivery: Jul ‘17 – Oct ’18 (AUDFob/bdmt)

Source: ABS

Jun-

2013

May

-201

4

Apr-2

015

Mar

-201

6

Feb-2

017

Jan-

2018

Dec-2

018

(p)

0

100

200

300

400

500

600

700

800

kbdm

t

Month

Korea

India

Indonesia

Japan

Taiwan

China

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

18100

120

140

160

180

200

220

240

AU

DF

ob/b

dmt

Month

Nantong

Rizhao

Zhanjiang

Other and Unspec Ports-China(Excltaiwan)

TWA


Export prices for hardwood chips destined for Japan have been more patchy, across the

ports of delivery, as Figure 5 shows.

Fig. 5: Hardwood Chip Export Prices to Japan by Port of Delivery: Jul ‘17 – Oct ’18 (AUDFob/bdmt)

Source: ABS

The table below shows Australia’s hardwood chip export prices to the major ports for both

China and Japan, over the last three months.

Australian Hardwood Chip Export Prices to Major Chinese and Japanese Ports: Aug ’18 – Oct ’18 (AUDFob/bdmt)

Aug ‘18 Sep ‘18 Oct ‘18

China

Nantong 189.92 229.08 227.25

Rizhao 213.41 205.64 187.69

Other & Unspecifi ed Ports 207.93 219.47 197.69

Japan

Hachinohe 208.39 180.57 –

Iwakuni 222.09 231.21 230.96

Other & Unspecifi ed Ports 157.75 196.56 224.17

Nagoya 225.18 – 230.71

Niigata 187.55 – 211.73

Source: ABS

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

1890

110

130

150

170

190

210

230

250

270

AU

DF

ob/b

dmt

Month

Hachinohe

Iwakuni

Niigata

Other and Unspec Ports-Japan

TWA


Figure 6 shows the recent price experience. Figure 7 shows the Australian woodchip export

price index in Australian Dollars and Figure 8 provides the same data, in US Dollars.

Fig. 6: Woodchip Export Prices by Species: Jul ’12 – Oct ‘18* (AUDFob/bdmt)

Source: ABS * from March 2016 to May 2017, Softwood chip price data was unavailable

Fig 7: Australian Woodchip Export Price Index: Jan ’09 – Oct ‘18 (Index: Base: Jan ’09 = 100) (AUD)

Source: ABS & Uni of BC

Fig. 8: Australian Woodchip Export Price Index: Jan ’09 – Oct ‘18 (Index: Base: Jan ’09 = 100) (USD)

Source: ABS & Uni of BC

Jun-

2009

Aug-2

010

Oct-20

11

Dec-2

012

Feb-2

014

Apr-2

015

Jun-

2016

Aug-2

017

Oct-20

1850

75

100

125

150

175

Inde

x (B

ase:

Jan

'09

= 1

00)

Month

Hardwood

Softwood

USD

Jun-

2009

Oct-20

10

Feb-2

012

Jun-

2013

Oct-20

14

Feb-2

016

Jun-

2017

Oct-20

1840

60

80

100

120

140

160

180

Inde

x (B

ase:

Jan

'09

= 1

00)

Month

Softwood

Hardwood

AUD

Jul-2012

Oct-2013

Jan-2015

Apr-2016

Jul-2017

Oct-2018

90

110

130

150

170

190

210

230

AUDFob/bdm

t

Month

Softwood

Hardwood


Based on month-end exchange rates, the table below shows the average price of Australia’s

woodchip exports in US dollars for the last three months.

Australian Woodchip Export Prices: Aug ’18 – Oct ’18 (USDFob/bdmt)

Species Aug ‘18 Sep ‘18 Oct ‘18

Hardwood 145.91 150.00 149.40

Softwood 139.23 150.79 152.44

Weighted Average 145.38 150.03 149.68

Source: ABS & RBA

LogsSoftwood log exports down 4.6% year-ended October Australia’s exports of Softwood logs totalled 4.218 million m3 over the year-ended October, with

total exports for the full year 4.6% lower than for the prior year.

In October, exports totalled 314,049 m3, down 17.2% on the prior month, as export softening

continues.

Figure 9 shows total softwood log exports. China continues to be the primary destination for

Australia’s softwood log exports.

Fig. 9: Australian Softwood Log Exports: Jan ‘09 – Oct ‘18 (‘000 m3 & AUDFob/m3)

Source: ABS

As displayed in Figure 10, for the year-ended October 2018, logs of <15 cm diameter

accounted for 21.4% of total exports (902,127 m3), while the larger diameter logs accounted

for 78.6% (3,315,889 m3).

Jun-

2009

Oct-2

010

Feb-2

012

Jun-

2013

Oct-2

014

Feb-2

016

Jun-

2017

Oct-2

018

0

100

200

300

400

500

600

0

20

40

60

80

100

120

140

160

'000

m3

AU

DFo

b/m

3

Month


Fig. 10: Australian Softwood Log Exports by Size: Jan ’17 – Oct ’18 (‘000 m3)

Source: ABS

Differentiation of Softwood log exports based on their diameter allows for simple price analysis,

displayed in Figure 11.

Fig. 11 Australian Softwood Log Exports by Size: Jan ’17 – Oct ’18 (AUDFob/m3)

Source: ABS

For export, logs are recorded as larger or smaller than 15cm diameter. Larger dimension (>15

cm diameter at the small end) logs dominate exports volumes, and in October, they accounted

for 76.0% of total exports. The reported export volume was 238,820 m3, at an average price

of AUDFob146.90/m3.

Small sized softwood logs exports declined modestly in October to 75,229 m3. Exports were

recorded at an average price of AUDFob132.51/m3 in October, a fall from the September’s

peak, when the smaller dimension logs were higher-priced than their typically more valuable

larger-dimension cousins.

As Figures 12 and 13 show, shipments from each of the states are also quite varied in volume

from month to month.

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

180

100

200

300

400

500

600

'000

m3

Month

< 15cm

> 15cm

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

1880

90

100

110

120

130

140

150

160

AU

DF

ob/m

3

Month

< 15cm

> 15cm


Fig. 12 Softwood Log Exports <15 cm by State: Jan ’17 – Oct ’18 (‘000 m3 & AUDFob/m3)

Source: ABS

Fig. 13: Softwood Log Exports >15 cm by State: Jan ’17 – Oct ’18 (‘000 m3 & AUDFob/m3)

Source: ABS

Figure 14 displays Australia’s hardwood log exports. In October, exports totalled 43,352 m3, at

an average price of AUDFob192.36/m3. The major exporting state for the month was Tasmania,

however, at 24,645 m3, its exports were signifi cantly reduced on the 95,910 m3 of September.

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

180

20

40

60

80

100

120

140

160

180

200

0

20

40

60

80

100

120

140

160

'000

m3

AU

DF

ob/m

3

Month

Vic

NSW

Qld

Tas

WA

TWA

Jan-

2017

Apr-2

017

Jul-2

017

Oct-20

17

Jan-

2018

Apr-2

018

Jul-2

018

Oct-20

180

50

100

150

200

250

300

350

400

450

0

20

40

60

80

100

120

140

160

'000

m3

AU

DF

ob/m

3

Month

Vic

NSW

Qld

Tas

WA

SA

TWA


Fig. 14: Australian Hardwood Log Exports: Jan ’14 – Oct ’18 (‘000 m3 & AUDFob/m3)

Source: ABS

The table below shows hardwood log exports by State for the last three months.

Australian Hardwood Log Exports by State: Aug ’18 – Oct ’18 (m3)

State Aug ‘18 Sep ‘18 Oct ‘18

NSW 2,782 3,913 899

Qld 12,768 14,910 10,989

Tas 43,900 95,910 24,645

Vic 5,028 5,210 6,421

WA 274 895 397

Total 64,752 120,838 43,352

Source: ABS

Figure 15 shows the average price of Australian hardwood log exports to China against the

Weighted Average price.

Fig. 15: Australian Hardwood Log Exports to China vs Weighted Average: Jan ’14 – Oct ’18 (AUDFob/m3)

Source: ABS

Feb-2

014

Sep-2

014

Apr-2

015

Nov-2

015

Jun-

2016

Jan-

2017

Aug-2

017

Mar

-201

8

Oct-20

180

20

40

60

80

100

120

140

0

50

100

150

200

250

300

350

400

450

'000

m3

AU

DF

ob/m

3

Month

Quantity

TWA

Feb-2014

Oct-2014

Jun-2015

Feb-2016

Oct-2016

Jun-2017

Feb-2018

Oct-2018

0

100

200

300

400

500

600

AUDFob/m

3

Month

China

TWA


Sawnwood

Sawn softwood consumption lifts to 4.135 million m3 year-ended October Australia’s estimated apparent Sawn Softwood consumption rose 14.5% over the year-ended

October, lifting to 4.135 million m3.

Production (where domestic sales are the proxy measure) for the year were down 1.1% to

3.102 million m3, over the year-ended October. Exports declined 29.7% over the same period

to 0.186 million m3.

It is imports that have provided the lift in apparent consumption. They rose 48.0% over the year,

to reach 1.097 million m3.

Figure 16 displays the details.

Fig. 16: Apparent Consumption of Softwood Products: Oct ’15 – Oct ‘18 (‘000 m3)

Source: ABS and Forest & Wood Products Australia Note: Production is actually ‘sales’ volumes from each month

In October, sales (used in this data as a proxy for production, and including an estimated 90%

of the national production capacity), totalled 280,292 m3 for the month. As Figure 17 shows,

sales in October continued to be dominated by the structural grades

Fig. 17: Australian Domestically Produced Sawn Softwood Sales by Grade: Oct ‘18 (%)

Source: Forest & Wood Products Australia

Oct-20

15

Feb-2

016

Jun-

2016

Oct-20

16

Feb-2

017

Jun-

2017

Oct-20

17

Feb-2

018

Jun-

2018

Oct-20

18-50

0

50

100

150

200

250

300

350

400

450

'000

m3

Month

Sales

Exports

Imports

AC

Outdoor Domestic (7.8%)

Fencing (3.8%)Appearance (0.5%)

Structural < 120mm (23.3%)

Structural > 120mm (2.0%)

Treated Structural < 120mm (23.3%)

Treated Structural > 120mm (1.7%)

Landscaping (4.9%)

Poles (1.0%)

Packaging (17.7%)

Ungraded (10.0%)Export (3.9%)


Dressed sawn softwood imports - 822,405 m3 year-ended OctoberDressed (planed and/or sanded) Sawn Softwood product imports rose 57.9% to 822,405 m3

over the year-ended October 2018. Roughsawn imports were up 24.7% over the same period,

totalling 274,597 m3.

Figure 18 details dressed sawn softwood imports since July ’12 and Figure 19 shows imports

of roughsawn softwood over the same period. Figure 20 indexes prices over the same period.

Figure 21 shows sawn softwood imports by their region of destination.

Fig. 18: Dressed Sawn Softwood Imports: Oct ‘12 – Oct ’18 (‘000 m3 & AUDFob/m3)

Source: ABS

In October 2018, imports of dressed sawn softwood totalled 81,079 m3. The average price of

imports over the month was AUDFob611.30/m3.

Fig. 19: Roughsawn Softwood Imports: Oct ‘12 – Oct ’18 (‘000 m3 & AUDFob/m3)

Source: ABS

Roughsawn softwood imports totalled 25,416 m3 in October 2018, imported at an average

price of AUDFob623.66/m3.

Dec-2

012

Oct-20

13

Aug-2

014

Jun-

2015

Apr-2

016

Feb-

2017

Dec-2

017

Oct-20

180

10

20

30

40

50

60

70

80

90

0

100

200

300

400

500

600

700

800

'000

m3

AU

DFo

b/m

3

Month

Quantity

Weighted Average

Dec-2

012

Oct-20

13

Aug-2

014

Jun-

2015

Apr-2

016

Feb-

2017

Dec-2

017

Oct-20

180

5

10

15

20

25

30

35

0

100

200

300

400

500

600

700

'000

m3

AU

DFo

b/m

3

Month

Quantity

Weighted Average


Fig. 20: Dressed and Roughsawn Softwood Imports vs AUD: Oct ‘12 – Oct ’18 Index (Base: Aug ’12 = 100)

Source: ABS and Uni of BC

Fig. 21: Sawn Softwood Imports by Region: Oct ‘12 – Oct ’18 (‘000 m3)

Source: ABS

Subscribers to the monthly data series can fi nd further details in the Sawn Softwood Import

fi le each month.

Plywood, Wood Panels & EWPs

Particleboard imports lift 19.2% as price rises average 7.8%The big lift in imports of Particleboard continued in October, with year-end imports reaching

131,884 m3, rising 19.2% on the prior year. Underscoring the strength of demand, average import

prices rose 7.8% over the same period.

The major import grade is raw Particleboard that does not have a melamine fi nish. Imports totalled

94,215 m3 over the year, a rise of 25.0% over the prior year. The average import price was 6.3%

higher than the year before.

Jul-2

012

Oct-20

13

Jan-

2015

Apr-2

016

Jul-2

017

Oct-20

1860

80

100

120

140

160

180

Inde

x (B

ase:

Jul

'12

= 1

00)

Month

Dressed

Roughsawn

USD/AUD

Jul-2

012

Oct-20

13

Jan-

2015

Apr-2

016

Jul-2

017

Oct-20

180

20

40

60

80

100

120

'000

m3

Month

Asia

Europe

Nth America

Oceania

Sth America


Fig. 22: Australian Particleboard Imports by Grade: Jan ’16 – Oct ’18(m3 & AUDFob/m3)

Source: ABS

OSB trade up 6.1%, but softeningImports of Oriented Strandboard (OSB) were 6.1% higher over the year-ended October 2018,

totalling 46,855 m3. Average prices were 10.8% higher over the year, at AUDFob489.36/m3.

In October, imports totalled 2,859 m3, 17.5% lower than in October 2017.

The specifi c OSB grade experienced an 11.9% increase in imports over the full year, rising to

39,878 m3, with the average price up 9.1% over the same period, compared to a year earlier.

Fig. 23: Australian OSB Imports by Grade: Jan ’16 – Oct ’18 (m3 & AUDFob/m3)

Source: ABS

MDF trade growth continues unabatedAustralia’s total imports of Medium Density Fibreboard (MDF) were 32.8% higher over the year-

ended October 2018, compared to the prior year. Imports totalled 151,934 m3, even as the

main grades experienced double-digit average price increases.

As always, imports of the ‘Other’ grade were the highest in both years, totalling 72,359 m3 over

the year-ended October 2018, a rise of 16.0% on the prior year, with the average import price

up 19.6% at AUDFob519.59/m3 over the same period.

Feb-2

016

Jun-

2016

Oct-20

16

Feb-2

017

Jun-

2017

Oct-20

17

Feb-2

018

Jun-

2018

Oct-20

180

5,000

10,000

15,000

20,000

25,000

0

100

200

300

400

500

600

m3

AU

DF

ob/m

3

Month

Particleboard (Melamine)

Particleboard (Other)

Other

TWA

Feb-2

016

Jun-

2016

Oct-20

16

Feb-2

017

Jun-

2017

Oct-20

17

Feb-2

018

Jun-

2018

Oct-20

180

1,000

2,000

3,000

4,000

5,000

6,000

0

100

200

300

400

500

600

m3

AU

DF

ob/m

3

Month

Oriented Strandboard

Other

TWA


MDF GradeAve Price (AUDFob/m3)

Oct '17 Oct '18% Change

YoY

4411.12.10.33 MDF - <5mm - density >0.8g/cm3 689.62 544.48 -21.0

4411.12.90.34 MDF - <5mm - other 615.73 492.58 -20.0

4411.13.10.35 MDF - >5mm - density >0.8g/cm3 935.88 1,036.15 10.7

4411.13.90.37 MDF - >5mm - other 474.87 579.04 21.9

4411.14.10.38 MDF - >9mm - density >0.8g/cm3 536.75 454.63 -15.3

4411.14.90.43 MDF - Other - not worked 560.74 587.19 4.7

4411.14.90.44 Other - Other 434.32 519.59 19.6

Source: ABS

Plywood imports continue to rise – some volume must be fl ooringAustralia’s total imports of Plywood rose 17.7% over the year to the end of October,

lifting to 545,018 m3 amidst concern that an increasing volume of these imports includes

flooring products.

That aside, the ‘Other’ Plywood grade saw imports lift 35.1% to 241,435 m3. The very large

increase making it likely that this grade includes large volumes of plywood backed fl ooring.

This may be refl ected in the average price, which over the year rose just 3.5%, compared with

the more solid prices growth experienced for the Structural grade.

The ‘Structural’ grade saw imports up 18.7% over the same period, to 85,185 m3, and

average prices up 7.6% over the year to AUDFob614.34/m3.

Imports of the ‘Overlaid’ grade increased 1.6% to 132,952 m3, with average prices up just

3.6% over the year-ended October.

The table below shows the average price experience for Plywood imports for the year-ended

October 2018, compared with the prior year.

Plywood GradeAnnual Price (m3)

Oct '17 Oct '18 % Change YoY

Interior 784.64 746.68 -4.8

Structural 570.84 614.34 7.6

Overlaid 918.37 951.09 3.6

Other 896.55 927.90 3.5

Weighted Average 832.51 856.14 2.8

Source: ABS

Door imports valued at AUD69.1 million YE OctoberThe value of Australia’s total imports of Builder’s Joinery products was up 16.4% over the year-

ended October 2018, totalling AUDFob241.0 million.

Although the value of other products rose more substantially over the year, imports of wooden

Doors increased in value by a modest 2.0%, reaching AUDFob69.077 million for the year.

The table below gives the details for October:

Import Value (AUDFob)

Oct '17 Oct '18 % Change YoY

Windows 3,029,103 2,334,651 -22.9

Doors 6,524,617 6,735,097 3.2

Posts & Beams 11,372,047 15,299,033 34.5

Source: ABS


Housing & Construction

Dwelling approvals down 11.1% in October on month-on-month basisThe new dwelling approvals market continued to decline in October, with total monthly

approvals 11.1% lower than October 2017, at 17,853 separate dwellings.

Approvals of Houses were 0.7% lower than a year earlier at 10,639 dwellings, while monthly

approvals of the always variable 4+ Storey Flats were 31.1% lower than in October 2017,

falling to 3,920 separate approvals.

The falls of interest are in approvals of Townhouses. They may have been expected to

be more resilient, in part because they are often a cheaper form of housing than free-

standing dwellings (because they use less land). However, they have been unable to

escape the rout and for single storey Townhouses, monthly approvals were 14.9% lower

in October 2018 than a year earlier. The fall for 2+ Storey Townhouses was a larger 20.7%

over the same period.

Annualised approvals are still displaying some growth, as the table below shows, but it will

literally be just a month until even that fi gure turns down. This is no slump, but the decline

is evident.

Year-end Dwelling Approvals by Type: Oct ‘17 - Oct 18 (Units)

Dwelling Type Sep ‘17 Sep ‘18 % Change

Houses 117,912 120,423 2.1

Townhouses (1 Storey) 10,123 8,821 -12.9

Townhouses (2+ Storeys) 26,636 25,499 -4.3

Flats (1 or 2 Storey) 2,235 1,622 -27.4

Flats (3 Storey) 4,818 3,436 -28.7

Flats (4+ Storey) 57,578 61,832 7.4

Total 219,302 221,633 1.1

Source: ABS

Dwelling approvals are also displayed in Figure 19

Fig. 19: Australian Housing Approvals by Type: Apr ’15 – Oct ‘18 (Units)

Source: ABS

Jun-

2015

Feb-2

016

Oct-20

16

Jun-

2017

Feb-2

018

Oct-20

180

5,000

10,000

15,000

20,000

25,000

Uni

ts

Month

Houses

Townhouses (1 Storey)

Townhouses (2+ Storeys)

Flats (1 or 2 Storey)

Flats (3 Storey)

Flats (4+ Storey)


Fig. 20: Australian Housing Approvals by State: Apr ’15 – Oct ‘18 (Units)

Source: ABS

Annualised Dwelling Approvals by State: YE Oct ‘17 - YE Oct ‘18 (Units & %)

State Sep ‘17 Sep ‘18 % Change

NSW 71,738 66,845 -6.8

Vic 66,727 74,365 11.4

Qld 41,797 41,767 -0.1

SA 12,344 12,170 -1.4

WA 19,999 17,280 -13.6

Tas 2,516 2,990 18.8

NT 858 649 -24.4

ACT 5,010 6,630 32.3

Source: ABS

Jun-2015

Feb-2016

Oct-2016

Jun-2017

Feb-2018

Oct-2018

0

5,000

10,000

15,000

20,000

25,000

Units

Month

NSW

Vic

Qld

SA

WA

Tas

NT

ACT


Typically, debate about population and population growth is

somewhat unedifying. But the emphasis on population growth, how

to deal with it, and where to ‘allocate’ the immigration proportion of

it surpasses that, and is highly economically relevant.

To that end, the early December Council of Australian Government

meeting that saw the Commonwealth and States discuss population

and how to manage it was actually a useful contribution to debate.

Some might say surprisingly, but the national population is just a

number. So, the focus on State based populations and potential and

constraints on growth was very welcome, though it has its risks.

In 2017, Australia’s net population grew 1.6% or 388,000 people.

Around 60% of that increase was net overseas migration, which

accounted for 236,800 people. One of the major drivers of the

increase has been temporary visa holders, most of whom are entitled

to do some level of work. Some are on working visas, some are

students with limited right and a small number are being assessed

for humanitarian visa rights.

So, it is important to grasp Australia’s current employment and

under-employment situation. Figure 1 shows the number of people

employed in Australia. It also shows the Unemployment Rate (those

without a job), the Underemployment Rate (those who want more

work) and the Labour Underutilisation Rate (the combination of

unemployment and underemployment).

We can see that labour underutilis nmnmation is improving mainly

because the unemployment rate is falling. That is, the under-

employment rate – people wanting more hours – is not falling quickly.

The under-use of labour in the economy is ineffi cient for sure, and it

is a drag on wages and therefore consumption growth. But it is not

directly linked to the size of the population.

One of the issues with a rapidly growing population is that the debate

and preparation for a rising population needs to be informed by the

real policy factors and not only the fl ights of fancy and perception

that can be a little too common.

Factors to be considered in this national conversation include

employment related matters like those in the chart, as well as existing

and prospective infrastructure needs and so on.

A larger Australia is inevitable, and in an economy where prosperity

is measured by consumption and its growth, it is no bad thing either.

How much larger the population becomes is probably less important

than how we ensure we manage a growing population to the benefi t

of all.

Economics Briefi ngPopulation: its about the economy of tomorrow

Name Period Up toLatest Data

Year-End

GDP Quarterly JQ’18 1.0% 2.7%

CPI Quarterly SQ’18 0.40% 1.9%

Unemployment Quarterly SQ’18 3.90%

Cash rate Monthly Dec ‘18 1.75%

Retail Trade Quarterly SQ ‘18 2.2%

NZD/AUD Daily 17 Dec ‘18 0.9466

NZD/USD Daily 17 Dec ‘18 0.6790

NZD/Euro Daily 17 Dec ‘18 0.6006

NZD/JPY Daily 17 Dec ‘18 77.02

Table Source: ABS, RBA, RBNZ and IndustryEdge research

Source: ABS

Oct-199

8

Apr-200

1

Oct-200

3

Apr-200

6

Oct-200

8

Apr-201

1

Oct-201

3

Apr-201

6

Oct-201

80

5,000

10,00015,000

20,00025,000

30,000

35,00040,000

45,00050,000

0

2

4

6

8

10

12

14

16

'000

Perce

nt

Month

Employed PersonsUnderemployment Ratio

Unemployment RatioLabour Underutilisation Ratio

New Zealand - Key Economic Data

Name Period Up toLatest Data

Year-End

GDP Quarterly SQ’18 0.6% 3.0%

CPI Quarterly SQ’18 0.4% 1.9%

Unemployment Monthly Oct ‘18 5.1%

Cash rate Monthly Dec ‘18 1.50%

Retail Trade Quarterly SQ’18 0.2%

AUD/USD Daily 17 Dec ‘18 0.7173

AUD/Euro Daily 17 Dec ‘18 0.6343

AUD/JPY Daily 17 Dec ‘18 81.41

Australia - Key Economic Data

Fig. 1 - Australia’s Employment & Labour Utilisation

Rates: Oct ‘98 - Oct ‘18 (‘000s & %)


Global pulp prices have started to decline, coming off record highs in the major Chinese market, and to a lesser extent, in the Western European market.

In China, Northern Bleached Softwood Kraft (NBSK) prices dropped an approximate USD100/t, falling to USD810/t as buyers worked their inventories through, looking at softening forward orders. Similarly, the Bleached Eucalypt Kraft (BEK) price declined an approximate USD70/t to USD750/t. This is displayed in Figure 1.

The differential between the two major chemical pulps is an estimated USD60/t and is therefore still at levels that work against substitution. Prices for both pulps are expected to fall further in December, with BEK prices under most pressure as Brazilian and other producers pursue cash fl ow.

As we commented last month, Chinese pulp demand is under pressure because of softening Chinese export production. This appears to be having a direct impact on prices, though it is unclear how far the tumbling market will fall.

Notably, in China, no grade of pulp was immune from the price infection in November. Even Dissolving pulp, which operates to different fundamentals to the ‘paper grade’ pulps, saw prices down USD15/t to USD925/t.

It was a similar situation for Unbleached Kraft Pulp (UKP), which is the feedstock for Kraftliner production and had seen prices rise due to the quality requirements for recovered paper shipments into China. The UKP price declined USD40/t to USD840/t in November, with expectations of further declines in December. This is a curious situation because China effectively shorted itself on recovered paper, and cannot make corrugated boxes from thin air and local recyclables alone.

It seems clear therefore that soft downstream demand for paper has slowed sales, applying the sharp downwards pressures that are the peculiar domain of commodities like pulp.

In that context, the leading forecaster of all things pulp, Hawkins Wright, has called the market, stating:

“The bull market for market pulp which started over two years ago is over, with prices for all pulp grades falling… during November.”

As ever, it is diffi cult to know how long or deep the rout will be, but seasonal factors suggest pulp demand and prices will not be under signifi cant upwards pressure until at least February 2019, after the Western holidays and Lunar New Year.

Global economic conditions are currently tightening, with pressures mounting in the US, and clear risks for Europe associated with the tempestuous and seemingly endless Brexit negotiations.

But all that aside, there is one fundamental that is diffi cult to avoid. Demand for fi bre resources is tight the world over, for a wide and growing range of purposes. A sharp price correction may have been required, but it does not seem there is room for larger declines and sustained lower pulp prices.

Pulp Market Briefi ngTop of the market - pulp prices head south

May-2006

Nov-2008

May-2011

Nov-2013

May-2016

Nov-2018

-200

0

200

400

600

800

1,000

USD/t

Month

NBSK

BEK

Spread

Fig. 1 - China Chemical Pulp Prices by Grade and

Spread: Jan ‘06 - Nov ‘18 (USD/t)

Source: Hawkins Wright

Global Pulp Prices: Nov ’18 (USDCif/t)

RegionNBSK BEK

PricesChange on Prior Month

PricesChange on Prior Month

N America 1,445 +15 1,235 –

W Europe 1,215 -15 1,025 -25

China 810 -100 750 -70

Korea 955 -20 845 -60

Source: Hawkins Wright, Brian McClay & Associates, Pachem and

IndustryEdge research

Nov-15

Apr-16

Sep-16

Feb-17 Jul-

17Dec-

17May-

18Oct-

180

5

10

15

20

25

30

35

0

200

400

600

800

1,000

1,200

ktpm

AUDF

ob/t

Month

BEK

BSK

Unbl Sftwd Sulphate

Other

Weighted Average

Fig. 2 - Australia’s Pulp Imports by Grade:

Jul ‘15 - Oct ‘18 (ktpm & AUDFob/tt)

Source: ABS


25-M

ar-2

016

2-Sep

-201

6

17-F

eb-2

017

28-J

ul-20

17

12-J

an-2

018

22-J

un-2

018

7-Dec

-201

870

80

90

100

110

120

130

140

150

160

Inde

x (B

ase:

25

Mar

ch =

100

)

Weekly

Composite Index

Aust/NZ

East Coast America

Japan

Sth East Asia

West Coast America

Global shipping and freight cost indices shifted higher – especially

for bulk goods – in the lead up to Christmas. The same appears

to be the case for major container shipping routes, but there are

routes for which there have been cost decreases.

The China Containerised Freight Index (CCFI) continues to show

apparent price defl ation on the Australia/New Zealand route, as

shown in Figure 1. There is some suspicion this index is not

recording the costs of all lines shipping ex-Shanghai and it is clear

it does not include shipments from some ports. The CCFI suggests

shipping is close to 15% cheaper than a year ago. The industry –

and prices – suggest otherwise.

To remedy this data gap, in 2019, we will commence reporting

monthly on average shipping costs for major grades of paper and

paperboard, from some key ports.

Globally, joc.com reports that: “Shippers can expect greater

capacity management from container shipping lines going into

2019 as the carriers try to better match supply with demand and

lift rates in an unforgiving high fuel-cost environment.”

Turning therefore to general shipping costs, we can see in Figure

2 that the price of bunker fuel fell over the last month, largely in line

with a small correction in general oil prices. The 11.3% decline in

reported average prices over the month to 11th December has little

to do with shipping, and all to do with global oil prices. In any event,

bunker fuel prices at USD570.237/t are 8.3% higher than they were

a year earlier.

The Baltic Dry Index (BDI) measures the average cost movement

of bulk shipping for goods like grains, iron, coal and for instance,

woodchips. As Figure 3 demonstrates, the BDI lifted almost

22% over the month to 14th December, but is down more or less

the same amount over the last year. A roller-coaster year refl ects

a shipping sector that is still unsettled after some massive

corporate failures, signifi cant trade tensions and apparent

over-supply of vessels. There is some time likely to have to

pass before the BDI can become more settled as a measure of

general shipping costs.

Meantime, as Australia’s container ports become more

congested, there is continued investment proposed for the

local market. Much of that investment is modern hard-stands

and container terminals adjacent or near to ports. Other

developments include further progress on the possibility of a

container terminal in Newcastle (north of Sydney) as congestion

exceeds acceptable levels in Sydney.

Shipping & Freight Briefi ng

Shipping costs variable as year ends

Fig. 2 - Average Global Bunker Fuel Index Price:

2 Jan ’13 - 14 Dec ‘18 (USD/Mt)

Source: Shanghai Shipping Exchange

7-Jan-2014

12-Aug-2014

26-Mar-2015

6-Nov-2015

24-Jun-2016

1-Feb-2017

15-Sep-2017

8-May-2018

14-Dec-2018

0

500

1,000

1,500

2,000

2,500

USD

Daily

Fig. 3 - Baltic Dry Index (Bulk Dry Shipping):

3 Jan ‘14 - 14 Dec ’18 (USD)

Source: BunkerIndex

10-Jan-2013

10-Oct-2013

14-Jul-2014

10-Apr-2015

5-Jan-2016

28-Sep-2016

26-Jun-2017

22-Mar-2018

14-Dec-2018

0

100

200

300

400

500

600

700

800

900

USD/M

t

Daily

Fig. 1 - China Containerised Freight Index &

Selected Sub-indices: 25 Mar ‘16 - 7 Dec ‘18

Source: Bloomberg


Wood Market SnapshotThe data in this wood market snapshot is generally aggregate volumes and trade weighted

average prices. It is provided as a quick reference or ‘look-up’ guide. The more detailed data is

contained in the trade data series available from IndustryEdge.

Forestry Products:

ProductVolume(Oct’18)

Average AUD Price*

Sep’18 Oct’18

Woodchips Exports (bdmt)

Hardwood 618,587 207.70 210.87

Softwood 60,697 208.79 215.16

Log Exports (m3)

Hardwood 43,352 192.36 128.85

Softwood 314,049 145.03 143.45

Sawnwood (m3)

Hardwood imports 4,058 1,609.48 1,685.19

Hardwood exports 2,787 1,060.52 935.80

Softwood imports 106,495 614.25 623.15

Softwood exports 15,289 341.38 339.93

Pulp/Recovered Fibre (t)

Softwood imports 17,859 1,097.60 1,064.15

Hardwood imports 12,902 1,001.28 833.38

Recovered paper exports 87,384 225.40 224.52

Exchange Rates

USD/AUD 0.7222 0.7085

JPY/AUD 81.96 80.23

EUR/AUD 0.6200 0.6247

GBP/AUD 0.5519 0.5575

Source: ABS and IndustryEdge research

Wood Market Data ServicesAnnual subscriptions to IndustryEdge wood market data services are available for

commencement at any time. Australian data services are supplied on a monthly basis and

bundled around major product lines, as follows:

Data Service# ContentsAnnual Cost

(AUD)*

Australian Wood ProductsWoodchip Exports, Log Exports, Sawnwood Imports, Sawnwood Exports

1,500

Australian Paper & Paper Products Paper & Paperboard Imports & Exports 1,500

Both data series All of the above 2,500

* plus GST for Australian subscribers

# All data is supplied in spreadsheet formats to facilitate ease of use by subscribers

As many subscribers are aware, IndustryEdge can also supply a wide range of data for other

countries, including New Zealand, Indonesia, China, Japan, Korea, Taiwan and Malaysia.

Please be aware that from the begininning of 2019, prices for all data services will increase

for the fi rst time in fi ve years

Contact us at [email protected] or on +61 [0] 3 5229 2470 to discuss your needs or

view samples.

Documents

Wood Market Edge