-
Timber Market SurveyDECEMBER QUARTER 2011
Contents Key messages . . . . . . . . . . . . . . . . . . . . .
. . 1
Economic & construction update . . . . . . . . . . 1
Imports and exports . . . . . . . . . . . . . . . . . . . 4
Softwood price changes— December quarter 2011 . . . . . . . . .
. . . . . . 6
Long term softwood price indexes . . . . . . . . . 7
Hardwood price changes — six months to December 2011 . . . . . .
. . . . 8
Long term hardwood price indexes . . . . . . . . . 9
References . . . . . . . . . . . . . . . . . . . . . . . . .
10
About the Timber Market SurveyThe quarterly Timber Market Survey
(TMS) report presents quantitative and qualitative information on
timber price movements and market trends in Australia. It contains
national price indexes for a range of timber products, as well as
an update on economic conditions that infl uence wood product
markets and the latest trade data. Price data presented in the
report are collected through quarterly surveys of a representative
sample of timber market participants in eastern Australia. All TMS
reports contain pricing information for softwood timber, panel and
engineered wood products. In addition, the June and December
quarter reports contain pricing information for hardwood timber
products.
Key messages
■ There were approximately 33,500 new dwelling approvals in
Australia over the December quarter 2011, a fall of around 12.8%
from the September quarter;
■ Despite a period of declining dwelling commencements, softwood
timber import levels remained relatively stable over the quarter,
rising by 1.1%;
■ MGP10 and MGP12 product prices remained steady over the
quarter in New South Wales. Meanwhile, price movements were mixed
in Victoria (ranging from around –1.9% to 0.7%) and prices fell in
Queensland (by around –2.3% to –0.8%); and
■ Prices for kiln dried hardwood structural products F17 and F27
increased by around 0.7% and 1.2%, respectively, over the six
months to December 2011.
1
Economic & construction update
The Australian Bureau of Statistics (ABS) results for Gross
Domestic Product (GDP) over 2011 showed growth of around 2.3%1.
This is less than the Reserve Bank of Australia’s (RBA) GDP
expectation of 2.75% in the February 2012 Statement of Monetary
Policy2. Although annual growth of 2.3% is a relatively strong
result compared to other developed nations, economic conditions
over 2011 were generally uneven across industries, sectors and
states. Strengthening demand for Australian mineral resources drove
investment in the mining sector, particularly in Western Australia
and Queensland. However, growth in non-mining sectors was below
expectations, with global economic uncertainty and the high
Australian Dollar (AUD) affecting trade-exposed sectors such as
manufacturing, tourism and tertiary education. Growth in household
consumption and borrowing was also subdued over 2011, which aligned
with below trend income growth.
Over the December quarter 2011, global economic conditions were
adversely affected by sovereign debt and banking problems in
Europe. The International Monetary Fund’s (IMF) October 2011
forecast for global growth of 4.0% over 2012 was revised downwards
to 3.25% in the January 2012 forecast. This was largely driven by
an expected recession in the Euro-zone over 2012 as a result of fi
scal consolidation, banking sector losses and the rise in sovereign
debt risk. In contrast, signs of economic recovery have recently
emerged in the US, with improvements in labour and housing markets
and strengthening consumer spending. In February, the 2012 RBA
growth forecast for Australia remained unchanged at 3.25%, which is
much stronger than other advanced economies. The RBA stated a
downside risk to this forecast is further fi nancial problems in
Europe, which would potentially have adverse impacts on Australia’s
major trading partners.
1 ABS, Australian National Accounts (5206.0), March 2012
2 RBA, Statement on Monetary Policy, February 2012
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2
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
Economic & construction update continuedAfter a volatile
September quarter, the AUD remained strong in the December quarter
2011 at an average of around US$1.02. The AUD surged to around
US$1.06 over the month of January 2012, which was contrary to many
forecasts from banking sector analysts. In early February 2012,
Westpac Economics3 revised its forecast upwards to show the AUD
remaining above parity with the US dollar through 2012.
High prices for raw materials have largely offset the effect of
the strong AUD on the export operations of mining companies4.
However, non-mining related parts of the domestic economy continue
to be challenged by the strong AUD as well as uncertain global
markets, competition from imports, below trend consumer spending
and low housing affordability. These challenges are refl ected in
the Australian Performance of Manufacturing Index (PMI) which
indicated a moderate contraction in the manufacturing sector over
the December quarter 2011. This decline was particularly evident in
the manufacture of construction materials, wood products and
furniture.
Despite reports of contractions in the manufacturing sector, the
National Australia Bank (NAB) Business Survey showed business confi
dence marginally recovering over the December quarter5. This
improvement follows consecutive falls over the June and September
quarters. The NAB business conditions index also recovered in the
December quarter, indicating an improvement in domestic demand for
early 2012.
ABS reported that the Consumer Price Index (CPI) remained
unchanged over the December quarter 2011, leaving the year end
measure of CPI at 3.1%6. Signifi cant falls in the price of fruit
and vegetables, pharmaceuticals and electronics contributed to the
CPI staying fl at over the December quarter. Underlying infl ation,
which is based on seasonally adjusted data with the removal of
extreme price changes, reached 2.5% for the year to December 2011.
Excluding the infl ationary effect of the carbon price from July
2012, the RBA expects underlying infl ation to remain within the
target range of 2% to 3% over 2012 and 2013.
Following 11 months of unchanged monetary policy, the RBA
lowered the Offi cial Cash Rate (OCR) by 25 basis points in
November and December 2011 to set the OCR at 4.25%. In February and
March 2012, the RBA Board left the OCR unchanged due to on-trend
growth and softening infl ation. The RBA suggested further easing
of monetary policy may be warranted if export demand is affected by
weaker economic conditions in Europe. The February release of the
Westpac-Melbourne Institute Index of Consumer Sentiment7 (CSI)
showed an increase in consumer confi dence of 4.2%. This
improvement may relate to lower interest rates. However, around the
time of this release of the CSI, many major Australian banks
increased interest rates by between 1 to 6 basis points which may
slightly offset this improvement in consumer sentiment.
Australian Housing Market
The residential housing market is a strong driver of demand for
timber products. Table 1 shows the latest activity across leading
ABS dwelling construction market indicators up to the December
quarter 20118. There were approximately 33,500 new dwelling
approvals over the December quarter, a fall of around 12.8% from
the September quarter. This downturn indicates a weaker outlook for
dwelling commencements in the near future. The latest available
data on dwelling commencements, to the September quarter 2011,
shows a fall of around 12.0% over the year to September. Finance
approvals for dwelling construction fell marginally over the
December quarter to be around 8.6% lower overall in 2011. The value
of alterations and additions reached over $1.6 billion over the
December quarter, an increase of around 1.1%.
3 Westpac Economics Market Insights, February 2012
4 CBA Economic Issues, 3rd February 2012
5 NAB, Quarterly Business Survey, December Quarter 2011
6 ABS, Consumer Price Index, Australia (6401.0) December
2011
7 Westpac-Melbourne Institute, Survey of Consumer Sentiment,
January 2012
8 ABS, Housing Finance (5609.0) December 2011
Table 1: Summary of leading dwelling construction indicators,
December 2011
Housing market indicators Unit12 months to
Dec 20113 months to Dec 2011
Total new dwelling construction approvals
No. of dwellings i 15.13% i 12.81%
Private sector dwelling construction approvals
No. of dwellings i 10.06% i 10.23%
Finance approvals for dwelling construction
Value ($) i 8.57% i 1.33%
Alterations and additions approvals
Value ($) i 1.09% h 1.08%
Source: Australian Bureau of StatisticsNB: The data are the
seasonally adjusted value of approvals for the public and private
sectors.
New dwelling approvals have followed a general downward trend
since early 2010. Over the December quarter 2011, dwelling
approvals fell to the lowest quarterly total since March 2009. Any
infl uence of lower interest rates on new dwelling approvals are
likely to be realised over the fi rst half of 2012. Figure 1 shows
how national dwelling approvals tend to increase as the OCR
decreases and vice versa.
Figure 1: Monthly historic movement in national dwelling
approvals and Offi cial Cash Rate
0
1
2
3
4
5
6
7
8
0
2
4
6
8
10
12
14
16
18D
ec-9
3
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6
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7
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9
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1
ca
sh
ra
te (
%)
'00
0 a
pp
rova
ls
Dwelling approvals (3 monthly moving average)
RBA Official Cash Rate (RHS)
Source: Australian Bureau of Statistics, Reserve Bank of
AustraliaNB: The above data are seasonally adjusted
Figure 2 shows a breakdown of monthly dwelling approvals by
state. Victoria has had the largest share of dwelling approvals
since mid-2008, with approval levels diverging from New South Wales
and Queensland. This difference moderated over 2011, as Victoria’s
approvals fell by around 17% to 52,457 new dwellings. However,
Victoria’s 2011 total was still considerably higher than in New
South Wales (32,653 dwelling approvals) and Queensland (26,734
dwelling approvals). The Housing Industry Association (HIA)
forecasts9 for dwelling commencements over 2012 show an expected
fall in Victoria (−15%) and Tasmania (−11%), while commencements
are expected to rise in New South Wales (8%), Queensland (3%),
Western Australia (1%) and South Australia (6%).
9 HIA Housing Forecasts, January 2012
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3
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
Economic & construction update continuedFigure 2: Monthly
dwelling approvals by state
0
1
2
3
4
5
6
7
De
c-0
6
Ma
r-0
7
Ju
n-0
7
Se
p-0
7
De
c-0
7
Ma
r-0
8
Ju
n-0
8
Se
p-0
8
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c-0
8
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9
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n-0
9
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p-0
9
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c-0
9
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r-1
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0
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r-11
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n-1
1
Se
p-1
1
De
c-1
1
'00
0 a
pp
rova
ls
Victoria New South Wales Queensland
Western Australia South Australia Tasmania
Source: Australian Bureau of StatisticsNB: The above fi gures
are seasonally adjusted
Figure 3 shows the value of fi nance approvals for the
construction of new dwellings and the value of alterations and
additions approvals over the last decade. The value of fi nance
approvals for dwelling construction experienced a rapid increase
over 2009 which was largely driven by government stimulus to the
housing industry. Following a peak in October 2009 and the
unwinding of government support, fi nance approvals declined before
stabilising at around $1.3 billion per month over the second half
of 2011. The value of alterations and additions approvals, which
relate to the home renovation market, eased back over 2011. Lower
spending on renovations could be driven by weaker conditions in the
housing market. The ABS house price index for the eight capital
cities recorded a fall in the weighted average house price of
around 4.8% over 201110.
Figure 3: Monthly value of approvals for housing fi nance and
alterations and additions
0.0
0.5
1.0
1.5
2.0
2.5
Dec
-00
Jun-
01
Dec
-01
Jun-
02
Dec
-02
Jun-
03
Dec
-03
Jun-
04
Dec
-04
Jun-
05
Dec
-05
Jun-
06
Dec
-06
Jun-
07
Dec
-07
Jun-
08
Dec
-08
Jun-
09
Dec
-09
Jun-
10
Dec
-10
Jun-
11
Dec
-11
$ bi
llion
Finance for construction of new dwelingsValue of alterations and
additions (3 month rolling avg.)
Source: Australian Bureau of StatisticsNB: The above fi gures
are seasonally adjusted
10 ABS, house price index (6416.0), December 2011
Over the last two decades, the amount of detached housing
construction as a proportion of total dwelling commencements has
declined and multi-residential housing construction has increased.
Multi-residential housing, which includes attached town houses,
blocks of fl ats and apartment buildings, generally uses less
timber products in construction than detached houses. Over the
period from 1980 to 1999, the proportion of detached houses in
total national dwelling commencements averaged around 74%11. From
2000 to 2011, this share fell by around 6% as the construction of
multi-residential dwellings increased. Construction of
multi-residential housing generally occurs in urban areas and
recent media reports suggest that Australia’s cities will require
high-density living to sustainably accommodate growing
populations12.
Figure 4 shows the historic share of detached housing
construction in total dwelling commencements in New South Wales,
Victoria and Queensland. The proportion of detached housing
construction has traditionally been higher in Victoria and
Queensland than in New South Wales. However, these differences
appear to have reduced over 2009 and 2010 as the market share of
multi-residential dwellings increased in Victoria and Queensland. A
growing preference for multi-residential dwellings presents
challenges to the timber industry and there have been some recent
examples of innovative timber use in apartment building
construction. Construction of a ten storey timber inner-city
apartment building in Melbourne, made from softwood panels imported
from Europe, is planned for completion in 201413.
Figure 4: Proportion of detached houses in total dwelling
commencements
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Se
p-8
0
Se
p-8
1
Se
p-8
2
Se
p-8
3
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p-8
4
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p-8
5
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6
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p-8
7
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p-8
8
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9
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0
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1
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2
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5
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% d
eta
ch
ed
ho
use
s in
dw
elli
ng
co
mm
en
ce
me
nts
Note: Six month rolling averages
New South Wales Victoria Queensland
Source: Australian Bureau of StatisticsNB: The above fi gures
are seasonally adjusted
11 ABS, Dwelling commencements (8750.0) September 2011
12 http://www.abc.net.au/news/ Mega city plan for central
Melbourne, 17th February 2012
13 http://www.theage.com.au/ Wooden highrise to bring cheers to
old brewery site 28th February 2011
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4
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
Imports and exportsFigure 5 shows the latest available data on
the volume of Australian imports and exports of softwood timber.
Imports of softwood sawn timber rose to around 158,000 cubic metres
over the December quarter, a moderate increase of around 1.1% since
the previous quarter. This continues a period of relative
steadiness for softwood timber imports. The volume of softwood sawn
timber exported from Australia over the second half of 2011 is due
to be released by the Australian Bureau of Agricultural and
Resource Economics and Sciences (ABARES) in time for the June
quarter 2012 TMS report.
Figure 5: Quarterly softwood timber imports and exports
0.00
0.20
0.40
0.60
0.80
1.00
1.20
0
20
40
60
80
100
120
140
160
180
200
Mar
-04
Jun-
04S
ep-0
4D
ec-0
4M
ar-0
5Ju
n-05
Sep
-05
Dec
-05
Mar
-06
Jun-
06S
ep-0
6D
ec-0
6M
ar-0
7Ju
n-07
Sep
-07
Dec
-07
Mar
-08
Jun-
08S
ep-0
8D
ec-0
8M
ar-0
9Ju
n-09
Sep
-09
Dec
-09
Mar
-10
Jun-
10S
ep-1
0D
ec-1
0M
ar-1
1Ju
n-11
Sep
- 11
Dec
-11
$US
:$A
U
'000
m3
Imports (LHS) Exports (LHS) $US:$AU exchange rate (RHS)
Source: Global Trade Atlas, Reserve Bank of Australia,
ABARES
Figure 6 shows a breakdown of quarterly softwood timber imports
by source, with an overlay of national dwelling commencements.
Despite a period of declining dwelling commencements, softwood
timber imports have stayed relatively stable. Favourable conditions
for timber importers have been driven by factors such as the strong
AUD, low shipping costs, suffi cient global supply and weaker
economic conditions in major source countries.
The major sources of imported timber over the December quarter
2011 were Europe (41%), New Zealand (38%) and North America (18%).
European timber was sourced from a range of countries, including
Czech Republic (16%), Estonia (7%), Germany (5%), Sweden (5%) and
Austria (3%). Imports from North America rose to over 100,000 cubic
metres over the year to December 2011, which represented an
increase of around 26% from the previous year. The increase in
North American imports over 2011 was driven by higher volumes from
the United States, as imports from Canada remained steady.
Figure 6: Quarterly softwood timber imports by source14
0
5
10
15
20
25
30
35
40
45
50
0
50
100
150
200
250
300
De
c-9
9
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0
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n-0
8
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0 D
we
llin
g c
om
me
nce
me
nts
'00
0 m
³
Europe New Zealand
North America Chile
Other Dwelling commencements (RHS)
Source: Global Trade Atlas, Australian Bureau of Statistics
Figure 7 shows movement in the Baltic Dry Index, a measure of
global shipping costs for transporting raw materials. The index
comprises costs for Capesize, Panamax, Supramax and Handysize
vessels. Shipping costs fell dramatically during the global fi
nancial crisis (GFC) and have since been volatile due to fl
uctuating global trade and an oversupply of ships (that were
ordered in the lead up to the GFC). The Baltic Dry Index fell to
its lowest levels since the GFC over January 2012, which may be
related to an oversupply of vessels and a slowdown in international
trade during the Chinese new year.
Figure 7: Baltic Dry Index
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Dec-0
6
Feb-0
7
May-0
7
Aug-0
7
Oct-
07
Jan-0
8
Apr-
08
Jun-0
8
Sep-0
8
Nov-0
8
Feb-0
9
May-0
9
Aug-0
9
Oct-
09
Jan-1
0
Mar-
10
Jun-1
0
Sep-1
0
Nov-1
0
Feb-1
1
May-1
1
Aug-1
1
Oct-
11
Jan-1
2
BD
I In
dex
9 day moving average
Source: Pulp Watch
14 Harmonised System code 440710 – Lumber, Coniferous (Softwood)
of a thickness exceeding 6 mm
Despite a period of declining
dwelling commencements,
softwood timber imports have
stayed relatively stable.
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5
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
Figure 8 shows the latest available data on the volume of
Australian imports and exports of softwood plywood and veneer.
Imports over the December quarter rose to around 82,400 cubic
metres, a 7.7% increase from the previous quarter. This result
continues a general upward trend in import volumes of softwood
plywood and veneer which began over the second half of 2009. The
overall total for 2011 of around 295,000 cubic metres was the
highest annual volume of plywood and veneer imports on record. At
the time of publishing, plywood and veneer export data for the
second half of 2011 was not available.
Figure 9 illustrates a breakdown of quarterly plywood and veneer
imports by source country. New Zealand has traditionally been the
most signifi cant source country for Australia’s plywood and veneer
imports. However, over the last decade, Chile and China have
emerged as signifi cant sources for Australian imports. Chile (20%)
overtook New Zealand (17%) to become the major source country for
imported plywood and veneer over the December quarter.
Figure 8: Quarterly plywood and veneer imports and exports
0
0.2
0.4
0.6
0.8
1
1.2
0
10
20
30
40
50
60
70
80
90
Mar-
04
Jun-0
4S
ep-0
4D
ec-0
4M
ar-
05
Jun-0
5S
ep-0
5D
ec-0
5M
ar-
06
Jun-0
6S
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07
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09
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ep-0
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Jun-1
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11
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1S
ep-1
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ec-1
1
$U
S:$
AU
'000 m
3
Imports (LHS) Exports (LHS) $US:$AU exchange rate (RHS)
Source: Global Trade Atlas, Reserve Bank of Australia,
ABARES
Imports and exports continuedFigure 9: Quarterly plywood and
veneer imports by source
0
10
20
30
40
50
60
70
80
90
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
Mar-
08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-
09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-
10
Jun-1
0
Sep-1
0
Dec-1
0
Mar-
11
Jun-1
1
Sep-1
1
Dec-1
1
'000 m
³
New Zealand Chile China Malaysia Indonesia Other
Source: Global Trade Atlas
Figure 10 shows a breakdown of quarterly imports of hardwood
sawn timber up to the December quarter. Unlike recent trends in
softwood timber imports, hardwood timber imports have not
experienced signifi cant increases following the GFC. Imports of
hardwood sawn timber fell to approximately 20,500 cubic metres over
the December quarter, a decrease of around 9.5% from the September
quarter 2011. The majority of import volumes over the December
quarter continued to be sourced from Indonesia (33%) and Malaysia
(35%).
Figure 10: Quarterly hardwood timber imports by source
0
5
10
15
20
25
30
35
40
45
Jun-
02S
ep-0
2D
ec-0
2M
ar-0
3Ju
n-03
Sep
-03
Dec
-03
Mar
-04
Jun-
04S
ep-0
4D
ec-0
4M
ar-0
5Ju
n-05
Sep
-05
Dec
-05
Mar
-06
Jun-
06S
ep-0
6D
ec-0
6M
ar-0
7Ju
n-07
Sep
-07
Dec
-07
Mar
-08
Jun-
08S
ep-0
8D
ec-0
8M
ar-0
9Ju
n-09
Sep
-09
Dec
-09
Mar
-10
Jun-
10S
ep-1
0D
ec-1
0M
ar-1
1Ju
n-1 1
Sep
-11
Dec
-11
'000
m3
Indonesia Malaysia Papua New Guinea United States Solomon
Islands Other
Source: Global Trade Atlas
Over the last decade, Chile and
China have emerged as signifi cant
sources for Australian imports
of plywood and veneer
timber products.
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6
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
The latest price trends for the major structural softwood timber
products are shown in Table 2. This quarter’s results for MGP10 and
MGP12 products showed only moderate changes from the September
quarter 2011 prices. MGP10 and MGP12 products experienced slight
price falls ranging from around 0.4% to 1.0% over the quarter. Over
the year to December 2011, prices fell for all of the MGP10, MGP12
and treated F7 products included in the TMS. Price falls for
structural softwood products coincided with weaker conditions in
the housing market (as shown in Figure 1) and steady levels of
imports of competing products (as shown in Figure 6).
TMS results over the December quarter showed varying trends in
MGP product prices at the state level. MGP prices remained
relatively steady over the quarter in New South Wales. Meanwhile,
there were mixed price movements in Victoria (ranging from −1.9% to
0.7%) and widespread price falls in Queensland (ranging from −2.3%
to −0.8%). Comments from TMS participants generally refl ected
tough trading conditions in the construction market, with many
participants mentioning sales were below expectations over the
quarter.
Table 2: Structural softwood timber — nominal price changes to
the December quarter 2011
ProductDimensions
(mm)12 months to
Dec-113 months to
Dec-11
MGP 10 70 x 35 x 4800 i 3.43% i 0.58%
MGP 10 90 x 35 x 4800 i 4.87% i 0.38%
MGP 12 70 x 35 x 4800 i 7.25% i 0.97%
MGP 12 90 x 35 x 4800 i 7.00% i 0.57%
F7 – H3 treated 70 x 35 x 4800 i 2.35% i 1.42%
F7 – H3 treated 90 x 45 x 4800 i 4.02% i 0.66%
Source: Timber Market Survey
Table 3 shows the latest price movements in outdoor softwood
timber products. Prices for treated sleepers continued to increase
over the December quarter 2011, while treated decking prices
experienced a marginal fall. In contrast to prices for structural
softwood products, outdoor timber product prices have been
relatively strong over 2011, particularly for treated sleepers.
Some TMS participants made comment about steady sales into the home
renovation market.
Table 3: Outdoor softwood timber — nominal price changes to
December quarter 2011
ProductDimensions
(mm)12 months to
Dec-113 months to
Dec-11
Treated decking 90 x 20 i 0.76% i 0.62%
Treated sleepers 200 x 75 x 2400 h 5.12% h 2.60%
Source: Timber Market Survey
Table 4 shows price movements for plywood, particleboard and MDF
panel products. Prices for plywood C/D grade products continued to
fall over the December quarter, to be around 3.0% to 5.0% lower
over the year. Price falls in plywood products are likely to be
related to competition from cheaper plywood and veneer imports,
which reached high levels over 2011 (as shown in Figure 8).
Particleboard tongue and groove prices experienced marginal falls
over the quarter, while Medium Density Fibreboard (MDF) prices
strengthened by 1.7% to 2.1%.
Softwood price changes — December quarter 2011Table 4: Panel
products — nominal price changes to December quarter 2011
ProductDimensions
(mm)12 months to
Dec-113 months to
Dec-11
Plywood C/D Grade 2400 x 1200 x 12 i 2.99% i 0.62%
Plywood C/D Grade 2400 x 1200 x 17 i 5.04% i 0.07%
Particleboard T&G 3600 x 900 x 19 h 3.95% i 0.03%
Particleboard T&G 3600 x 900 x 22 h 4.68% i 0.48%
MDF 2400 x 1200 x 16 h 4.66% h 2.12%
MDF 2400 x 1200 x 18 h 4.46% h 1.68%
Source: Timber Market Survey
Table 5 shows price movements for engineered wood products.
Similarly to the previous quarter, price movements over the
December quarter 2011 for laminated I-beam and Laminated Veneer
Lumber (LVL) experienced only small price changes. However, over
the year, I-beam product prices generally remained steady, while
LVL product prices fell by around 3.6% to 3.8%.
Table 5: Engineered wood products — nominal price changes to
December quarter 2011
ProductDimensions
(mm)12 months to
Dec-113 months to
Dec-11
I-joist/I-beam 240 x 47 h 0.06% h 0.54%
I-joist/I-beam 300 x 63 h 0.10% h 0.96%
LVL 200 x 36 i 3.77% i 1.05%
LVL 300 x 45 i 3.59% i 0.82%
Source: Timber Market Survey
MGP10 and MGP12 products
experienced slight price falls
ranging from around
0.4% to 1.0% over the
December quarter.
-
7
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
The historic nominal price trends for key TMS softwood products
are shown in Figure 11. The MGP10, MGP12 and treated F7 indexes
presented in Figure 11 are calculated using product weightings of
40% for 70 x 35 mm and 60% for 90 x 35 mm.
Price trends for structural and outdoor products have diverged
over the last 18 months. The price indexes for outdoor products
have generally followed an upward trend over this period, with the
landscaping market apparently being less affected by the housing
downturn. In contrast, price indexes for MGP10, MGP 12 and treated
F7 structural products have declined, with the MGP 10 index being
the only softwood structural index to remain above levels
experienced during the GFC. Over the last 18 months, price indexes
for structural products have broadly refl ected the performance of
the housing construction market.
Figure 11: Quarterly nominal price index15 of key softwood
timber products
80
90
100
110
120
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
Mar-
08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-
09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-
10
Jun-1
0
Sep-1
0
Dec-1
0
Mar-
11
Jun-1
1
Sep-1
1
Dec-1
1
Index (
Mar-
04 =
100)
MGP 10 MGP 12 Treated F7 (H3)
Treated Decking Treated Sleepers
Source: Timber Market Survey
Figure 12 shows historic price movements for wood based panels.
Despite some intermittent volatility, the price index for Plywood
C/D has followed a general downward trend since the March quarter
2009. As shown in Figure 8, import volumes of plywood and veneer
timber products have increased over this period which suggests
there is a higher level of competition in the marketplace.
Meanwhile, price indexes for particleboard tongue and groove and
MDF have followed a long term upward trend. This gives an
indication of relatively steady demand for particleboard and MDF
products, which appears to be less affected by imports or weaker
conditions in the housing market.
The historic price trend of selected engineered wood products is
shown in Figure 13. The I-joist and LVL price indexes have diverged
over the last three years, with I-joist prices being relatively
stronger than LVL prices. As with plywood C/D products, it appears
that a major driver of decreasing LVL prices has been the
competitiveness of imported products.
15 The reported price changes are based on weighted average
price changes across New South Wales, Victoria and Queensland using
weightings of 50%, 25% and 25% respectively to represent the
approximate size of softwood markets in each state.
Long term softwood price indexesFigure 12: Quarterly nominal
price index16 of key wood based panel products
80
90
100
110
120
130
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
Mar-
08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-
09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-
10
Jun-1
0
Sep-1
0
Dec-1
0
Mar-
11
Jun-1
1
Sep-1
1
Dec-1
1
Index (
Mar-
04 =
100)
Plywood C/D Grade 2400 x 1200 x 12 Particleboard T&G 3600 x
900 x 19
MDF 2400 x 1200 x 16
Source: Timber Market Survey
Figure 13: Quarterly nominal price index15 of engineered wood
products
80
90
100
110
120
Mar-
04
Jun-0
4
Sep-0
4
Dec-0
4
Mar-
05
Jun-0
5
Sep-0
5
Dec-0
5
Mar-
06
Jun-0
6
Sep-0
6
Dec-0
6
Mar-
07
Jun-0
7
Sep-0
7
Dec-0
7
Mar-
08
Jun-0
8
Sep-0
8
Dec-0
8
Mar-
09
Jun-0
9
Sep-0
9
Dec-0
9
Mar-
10
Jun-1
0
Sep-1
0
Dec-1
0
Mar-
11
Jun-1
1
Sep-1
1
Dec-1
1
Index (
Mar-
04 =
100)
Wood I-joist/beam LVL
Source: Timber Market Survey
16 The reported price changes are based on weighted average
price changes across New South Wales, Victoria and Queensland using
weightings of 50%, 25% and 25% respectively to represent the
approximate size of softwood markets in each state. The indexes are
calculated using a simple average of the two product
dimensions.
-
8
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
Hardwood price changes — six months to December 2011Table 6
presents price movements for a selection of structural hardwood
timber products for the six month period to December 2011. Results
showed kiln dried structural products F17 and F27 increasing by
around 0.7% and 1.2%, respectively, over the six months to December
2011. Over the 12 months to December 2011, F17 and F27 prices rose
by 2.0% and 3.6%, respectively. This is contrary to recent trends
in softwood structural product prices, which declined over
2011.
At the state level, green hardwood timber product prices showed
moderate increases over the six months to December 2011. Results
for F8 in Victoria showed an increase of around 0.4%, to be around
1.9% higher over the year. F11 prices in New South Wales recovered
by around 1.5% over the six months to December after a 2.0% fall
over the previous period. F14 in Queensland continued to rise to be
around 1.8% higher over the year.
Table 6: Structural hardwood timber products — nominal price
changes to December 201117
Product Dimensions (mm)12 months to
Dec-116 months to
Dec-11
Kiln dried (KD) structural timber
F17 90 x 45 x 4.8 h 1.96% h 0.71%
F27 90 x 35 x 4.8 h 3.59% h 1.16%
Green timber
F8 (Victoria) 100 x 50 x 4.8 h 1.92% h 0.36%
F11 (NSW) 100 x 50 x 4.8 i 0.48% h 1.53%
F14 (Queensland) 100 x 50 x 4.8 h 1.80% h 1.18%
Source: Timber Market Survey
Price movements for hardwood fl ooring and joinery appearance
grade products are presented in Table 7. Over the six months to
December 2011, price movements were mixed amongst hardwood fl
ooring and joinery products. Tasmanian Oak and Victorian Ash fl
ooring product prices continued on a general upward trend. However,
prices for Blackbutt and Spotted Gum fl ooring products appear more
volatile. Blackbutt select grade and Spotted Gum standard grade
prices fell over the latest reporting period, while prices for
other fl ooring products experienced increases ranging from around
0.3% to 3.1%.
Comments from TMS participants refl ected on the varied price
movements for hardwood appearance products over the six months to
December 2011. While some participants commented on a strong sales
performance, many made comment about a stagnant market where price
movements have been kept at moderate levels due to increased
competition. TMS participants have mixed expectations for early
2012, with some forecasting steady sales while others expect a fl
at market for hardwood timber products.
17 Unless stated otherwise, the hardwood price changes reported
in Tables 6-7 are based on weighted average price changes across
New South Wales, Victoria and Queensland using weightings of 40%,
35% and 25% respectively to represent the approximate size of
hardwood markets in each state.
Table 7: Hardwood appearance products — nominal price changes to
December 2011
ProductDimensions
(mm)12 months to Dec-11
6 months to Dec-11
Flooring products
Vic Ash – Select grade (Victoria) 100 x 25 h 0.35% h 0.11%
Vic Ash – Standard grade (Victoria) 100 x 25 h 2.48% h 0.90%
Tasmanian Oak – Select grade 100 x 25 h 4.29% h 3.13%
Tasmanian Oak – Standard grade 100 x 25 h 2.12% h 1.07%
Blackbutt – Select grade 100 x 25 h 1.56% i 1.07%
Blackbutt – Standard grade 100 x 25 h 5.78% h 2.01%
Spotted gum – Select grade 100 x 25 h 2.69% h 0.33%
Spotted gum – Standard grade 100 x 25 h 0.38% i 1.74%
Sawn & dressed boards (joinery products)
Victorian ash – Select grade 125 x 50 h 0.12% i 0.94%
Victorian ash – Standard grade (Victoria) 125 x 38 h 3.21% h
1.56%
Source: Timber Market Survey
Some participants expect a fl at
market for hardwood timber
products over early 2012.
-
9
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
Figure 14 shows the long term nominal price trends for F17 and
F27 kiln-dried hardwood structural products. These products have
generally followed an increasing price trend since 2006. Over this
period, price trends for F17 and F27 have diverged with F17 prices
increasing at a relatively slower pace than F27.
Figure 14: Historic six monthly nominal price index18 of
selected hardwood structural products
80
85
90
95
100
105
110
115
120
125
130
Dec-0
3
Jun-0
4
Dec-0
4
Jun-0
5
Dec-0
5
Jun-0
6
Dec-0
6
Jun-0
7
Dec-0
7
Jun-0
8
Dec-0
8
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Index (
Dec-0
3 =
100)
F17 (KD) F27 (KD)
Source: Timber Market Survey
Figure 15 shows the long term nominal price trend of major
select grade fl ooring products purchased by timber wholesalers and
other merchants in New South Wales. The price indexes for Spotted
Gum, Sydney Blue Gum and Blackbutt select grade fl ooring have
broadly followed an upward trend since around 2007. However, the
most recent price move-ments over the six months to December 2011
have seen the fi rst falls in the indexes for Sydney Blue Gum and
Blackbutt select grade fl ooring products since June 2006.
18 The reported price changes are based on weighted average
price changes across New South Wales, Victoria and Queensland
surveys using weightings of 40%, 35% and 25% respectively to
represent the approximate size of hardwood markets in each
state.
Long term hardwood price indexesFigure 15: Historic six monthly
nominal price index of select grade fl ooring products — New South
Wales market
80
90
100
110
120
130
140
150
160
170
Jun-9
8
Jun-9
9
Jun-0
0
Jun-0
1
Dec-0
1
Jun-0
2
Dec-0
2
Jun-0
3
Dec-0
3
Jun-0
4
Dec-0
4
Jun-0
5
Dec-0
5
Jun-0
6
Dec-0
6
Jun-0
7
Dec-0
7
Jun-0
8
Dec-0
8
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Index (
Jun-9
8 =
100)
Spotted gum Sydney blue gum Blackbutt
Source: Timber Market Survey
Figure 16 shows the historic nominal price trend for Victorian
Ash and Tasmanian Oak fl ooring products in the Victorian market.
Results since June 2009 show select and standard grade prices
following a general upward price trend, which is more pronounced
for Tasmanian Oak select grade.
Figure 16: Historic six monthly nominal price index of select
and standard grade fl ooring products — Victorian market
80
85
90
95
100
105
110
115
120
Dec-0
7
Jun-0
8
Dec-0
8
Jun-0
9
Dec-0
9
Jun-1
0
Dec-1
0
Jun-1
1
Dec-1
1
Index (
Dec-0
7 =
100)
Vic Ash - Select grade Vic Ash - Standard grade
Tas Oak - Select grade Tas Oak - Standard grade
Source: Timber Market Survey
The most recent price movements
have seen the fi rst falls in indexes
for Sydney Blue Gum and Blackbutt
select grade fl ooring products since
June 2006.
-
ABARES (2011) Australian Forest and Wood Products Statistics —
March & June quarters 2011. Published by the Australian Bureau
of Agricultural and Resource Economics, Canberra.
ABS (2012) 5206.0 — Australian National Accounts, December 2011.
Quarterly series published by the Australian Bureau of Statistics,
Canberra.
ABS (2012) 8750.0 — Dwelling Unit Commencements, Preliminary,
September 2011. Quarterly series published by the Australian Bureau
of Statistics, Canberra.
ABS (2012) 6416.0 — House Price Indexes: Eight Capital Cities,
Australia, December 2011. Quarterly series published by the
Australian Bureau of Statistics, Canberra.
ABS (2012) 5609.0 — Housing Finance, Australia, December 2011.
Monthly series published by the Australian Bureau of Statistics,
Canberra.
ABS (2012) 8731.0 — Building Approvals, Australia, December
2011. Monthly series published by the Australian Bureau of
Statistics, Canberra.
ABS (2012) 8752.0 — Building Activity, Australia. December 2011.
Monthly series published by the Australian Bureau of Statistics,
Canberra.
GTIS (2012) Global Trade Atlas. Online database provided by
Global Trade Information Service. Available at:
http://www.gtis.com/gta/default.cfm?msg=1
HIA (2012) Housing Forecasts, January 2012. Monthly series
published by the Housing Industry Association Economics Group.
Available at: http://economics.hia.com.au/factsForecasts.aspx.
ITTO (2011) Tropical timber market report, December 2011.
Fortnightly report published by the International Tropical Timber
Organisation.
IMF (2012) World Economic Outlook: Update, January 2012. A
survey by the staff of the International Monetary Fund, Washington
D.C.
NAB (2012) Quarterly business survey. Monthly and quarterly
series published by National Australia Bank.
PWC/AIG (2012) Performance of Manufacturing Index, January 2012.
Monthly report produced by PWC.
RBA (2012) Statement on Monetary Policy, February 2012.
Published by the Reserve Bank of Australia, Sydney.
Westpac Economics (2012) Westpac Market Insights — Australia, G3
and New Zealand, February 2012. Monthly report produced by Westpac
Economics.
Westpac-Melbourne Institute (2012) Index of consumer sentiment.
Available at:
http://melbourneinstitute.com/miaesr/publications/indicators/csi.
10
TIMBER MARKET SURVEY DECEMBER QUARTER 2011
References
Next Quarter...The March quarter 2012 TMS report will be
available around the middle of May 2012. It will include the latest
quarterly price change data for softwood timber products.
The Timber Market Survey is prepared by URS. As one of the
largest and longest established forest sector consultancies in
Australia, New Zealand and Asia, URS has an extensive understanding
of the forest sector in our region. URS provides professional
services to the forest sector for all components of the forest
product chain including forest management and technical forestry
skills, due diligence, economics, policy, community and regional
development, business management and market intelligence.
For more information about the Timber Market Survey or URS
please contact:
Jade Hardman Duncan MacLeodSenior Associate Senior
[email protected] [email protected]
www.ap.urscorp.com
Funding provided by:
The Timber Market Survey (TMS) was prepared with funding from
Forest and Wood Products Australia, Forests NSW, Timber Queensland,
VicForests, HVP Plantations, Forestry Plantations Queensland, the
Department of Environment and Resource Management Queensland,
Forestry Tasmania, ForestrySA and the Forest Products Commission
Western Australia (‘the funding bodies’).
URS Australia Pty Ltd (URS) has prepared this report in
accordance with the usual care and thoroughness of the consulting
profession for the use of the funding bodies. It is based on
generally accepted practices and standards at the time it was
prepared. No other warranty, expressed or implied, is made as to
the professional advice included in this report. It is prepared in
accordance with the scope of work and for the purpose outlined in
the Agreement for Provision of Consulting Services dated 1 March
2009. The methodology adopted and sources of information used by
URS are outlined in this report. URS has made no independent verifi
cation of this information beyond the agreed scope of works and URS
assumes no responsibility for any inaccuracies or omissions. No
indications were found during our investigations that information
contained in this report as provided to URS was false.
This report was prepared between 15 January 2012 and 14 March
2012 and is based on the conditions encountered and information
reviewed at the time of preparation. URS disclaims responsibility
for any changes that may have occurred after this time. This report
should be read in full. No responsibility is accepted for use of
any part of this report in any other context or for any other
purpose or by third parties.
