• Why Did Australian Timber Prices Fall During a Construction Boom?

    21st March 2022

    Between June 2015 and June 2017, Australian MGP10 prices trended down in real terms in the middle of the most recent and prolonged construction boom. This trend apparently bucked conventional wisdom where prices increase in times of high demand. Three trends in the market were apparent which may explain this unusual event. They are:

    – The increase in total DUA and DUC was being driven by apartment construction alone, as DUA and DUC in housing construction had shown a flat trend since the end of 2014 (Figure 1). Housing construction, not apartments, is where most timber is consumed.
    – Fuel prices also declined significantly during the same period, reducing transport costs and allowing timber traders to decrease prices while still maintaining unit margins (Figure 1).
    – Softwood timber imports declined in the same period, down 21% to mid-2017 (Figure 2). Lower prices would have pushed imports out of the market. As prices recovered, so did imports.

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    Vietnam – A Powerhouse of Forestry Product Exports

    18th March 2022

    Vietnam, with a land area of 331 236 km2, has a growing population of 97.3 million and has managed impressive economic growth in the challenging pandemic climate. Between 2015 and 2019, Vietnam posted consistent GDP growth figures of approximately 7%. In 2020, while the global economy contracted in the face of COVID-19, Vietnam achieved 3% economic growth.[1] Vietnam’s economic growth rate exceeds its 1% per annum population growth resulting in an increasing GDP per capita. With 70% of Vietnam’s population currently of working age, this trend is predicted to continue until 2045. Experts expect that Vietnam’s ‘golden demographics’ will ensure its continued economic prosperity into the foreseeable future.[2]

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    Australian Softwood Residual Log Price Index – December 2021

    16th March 2022

    Margules Groome’s Australian Softwood Residual Log Price Index measures domestic softwood plantation residual log prices (excluding exports). The index is a measure of the residual log value to the forest owner once harvest and haulage costs are subtracted from mill door log prices. It is a measure of the forest owners’ log margins, or the spread between log prices and logistics (delivery) costs. It should be noted that there is no time lag between the indexes as shown.

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    Australian Harvest & Haul Cost index – December 2021

    10th March 2022

    Margules Groome’s quarterly harvest and haulage cost index for Australian plantation operations is based on actual price indexation mechanisms used by industry weighted by volume harvested. The previous index published in July 2021 showed a recovery in fuel prices as the economic growth returned following the COVID-19 pandemic.

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    Ascending US South Softwood Industry

    21st January 2022

    The US South is poised to become a critical softwood resource for regional and global forest product markets.
    The US South softwood timber resource is large, highly cost-competitive, and increasingly critical for the global supply of several forest products. In 2020, an estimated 12% of the world’s conifer timber harvest was in this region. With highly productive pine plantations, log prices are among the lowest in the world. They are also very stable. These advantages are attracting investment in forest products manufacture.