China market good for Australian exporters

Wednesday 8 Nov 2017

Lucrative log markets in China have resulted in a tripling of softwood log export volumes from Australia in the past four years, reports the Wood Resource Quarterly (WRQ).

Australia has rapidly become a major exporter of softwood logs and was the world’s sixth largest log exporter in 2016. During the 1H/17, the upward trend continued with shipments being 17% higher than in the 1H/16. In 2012, Australia’s annual exports totalled only 1.2 million m3. Just four years later, in 2016, exports had tripled to a record high of 3.6 million m3, of which 96% was destined for China. If the upward trend seen this far in the first six months of 2017 continues, export volumes will end up totalling over four million m3 in 2017, which represents approximately 25% of the total softwood timber harvest in Australia.

Obviously, exportation of logs has become an attractive alternative to domestic sales for timberland owners in Australia. Analysts at WRQ report that in 2012, there were minimal price premiums for exported logs over domestic logs, but by 2016 and 2017, premiums had surged to between A$35-50/m3. Despite these recent price increases, Australia is still considered to be a low-cost log supplier in the Chinese market as compared to other suppliers such as New Zealand, Russia and North America, mainly because of higher domestic sawlog prices in those markets.

Higher log export volumes have occurred at the same time as domestic log demand has gone up over 20% in four years, from 3.6 million m3 of lumber in 2012 to an estimated 4.4 million m3 in 2016. Although sawmill production fell slightly in 2016 from the previous year, the output from the Australian sawmill sector reached record high levels the past two years thanks to healthy domestic demand for softwood lumber.

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Source: Wood Resources International


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