Woodchip export prices surged in September

Australia’s woodchip exports were valued at AUD1.377 billion on a free-on-board basis over the year-ended September 2018. Almost 91% of the value was delivered by the massive hardwood chip export trade.

In September, hardwood chip exports averaged AUDFob207.70/bdmt (bone dried metric tonnes). In US dollar terms, hardwood chips averaged USDFob150.00/bdmt, their highest price in more than four and a half years. Softwood chip export prices averaged AUDFob208.79/bdmt. While on a small volume, the average softwood price was 8.9% higher than a month earlier, and at the highest level since early 2009.

Australian Woodchips Exports: Jul ’12 – Sep ’18 (AUDFob/t)

Source: ABS & IndustryEdge estimates 

Combined woodchip exports for the year totalled 7.336 million bdmt, with hardwood chip exports amounting to 6.644 million bdmt and softwood chips reaching 0.692 million bdmt.

Australian Woodchips Exports: Jan ’14 – Nov ’18 (p) (kbdmt)

Source: ABS, GTIS & IndustryEdge estimates          

Note: March 2016 to May 2017 softwood chips are estimates

The chart shows the details of total exports (including Softwood chips) on a monthly basis. Across the year ending September, annual Hardwood chip exports were 9.4% higher than a year earlier.

Due to the application of confidentiality restrictions during the period from March 2016 to May 2017, it is not possible to confidently calculate the growth in annual softwood chip exports.

The table below shows Australia’s woodchip exports for September, and IndustryEdge’sOctober estimate and November projection.

September
Woodchip Export

October
Woodchip Export Estimate

November
Woodchip Export Projection

555,081 bdmt (Hardwood)

616,769bdmt

542,935bdmt

19,013 bdmt (Softwood)

574,094 bdmt

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

Our 616,769 bdmt estimate of woodchip exports for October suggests it was a large shipment month after the comparatively low export volume ofSeptember’s ‘restocking’ period.

For November’s projection, at 542,935 bdmt, we note that the key export port of Portland, Victoria, now seems to be spacing out fleet arrivals rather than having some busy periods with many woodchip ships docked at the same time. This may lead to a more even, steady level of exports across the coming months rather than the 2-busy-months, 1-quiet-month pattern that had been observed in recent times. The Australian woodchip export market continues to refine its efficiencies, as it enters a very mature stage of development and operation.

We observe no signs of abatement in the strength of the woodchip market, especially for hardwood chips. Demand for hardwood chips is reportedly particularly strong for pulp used in the tissue sector, as well as for the manufacture of dissolving pulp.

*IndustryEdge’s Despatch to Shipment Ratio is based on a constantly expanding number of woodchip shipments. Details are supplied in the monthly Wood Market Edge.

This analysis was published in the November 2018 edition of Wood Market Edge.

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