Little logs get big prices

Smaller sized softwood log exports from Australia hit record average prices in March 2019. Averaging AUDFob162.45/m3, prices for softwood logs less than 15 cm diameter hit a new peak, sustaining their recent price advantage over the larger dimension logs.

For export, softwood logs are recorded as larger or smaller than 15cm diameter.

Exports of the smaller sized logs have fluctuated in recent months: falling in December, rebounding in January, before falling sharply again in February and again rebounding in March 2019. Exports were recorded at 79,357 m3 in March 2019.

Despite the volumes moving around, the average price of AUDFob162.45/m3 continues a long run of trend price growth for what are traditionally considered to be logs that yield lower value than the larger dimension logs.

Larger dimension (>15 cm diameter at the small end) logs dominate exports volumes, and in the month of March, they accounted for 78.6% of total exports. The reported export volume was 290,667 m3, at an average price of AUDFob144.39/m3.

With the price differential around AUD18/m3, the chart is important because it shows prices for larger dimension logs are more stable over all time periods.

Though it cannot be absolutely confirmed, IndustryEdge understands that larger dimension log sales are more linked to contracts than those for smaller dimension logs. Smaller dimension logs are more likely to be sold ‘as available’and as an arising from thinning and harvest where the target product is larger dimension logs.

In some respects, this can be observed in the chart below, that shows the exports of smaller dimension logs by state. Although most exports continue to be from Victoria, the occasional spikes from other states is indicative of occasional and opportunistic exports.

Overall, higher prices for nominally lower value logs suggests that the value of wood fibre has grown significantly (as we have also experienced with woodchip export prices for instance) and that when the opportunity arises, larger dimension export log prices may well rise.

 

This data was first published in the May 2019 edition (Edition 67) of Wood Market Edge. Detailed data is available from IndustryEdge’s comprehensive monthly Forest & Wood Market Data series, which includes a complimentary subscription to Wood Market Edge.

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