Woodchip exports up 8.6% in 2018

Despite being 8.6% higher than in 2017, Australia’s total woodchip exports were softening by late 2018, totalling 7.354 million bone dried metric tonnes (bdmt). Year-end exports peaked in November 2018 at 7.455 million bdmt, just more than 100,000 bdmt higher than the December 2018 result.

Hardwood chip exports totalled a be-devilling 6,665,958 bdmt, up a solid 6.2% on the prior year.

We note that the year-end softening is modest. It is not reflective of any demand side pressures, but rather appears to indicate a supply-chain that pushed to its limits in the second half of 2018, and seems set to hover around these upper levels.

Indeed, demand remains sufficiently strong for hardwood chip prices to have increased, with application for the first half of 2019, with our understanding that demand is strong enough for a further round of price negotiations mid-year.

Always variable, because exports are a function of a harvest dedicated to solid wood production, softwood chip exports in 2018 totalled 688,456 bdmt.

After three successive months in which exports totalled more than 600,000 bdmt, January exports were always destined to be lower. The confluence of the summer holiday season, the run in to the weaker demand over the Lunar New Year and the need to re-stock the stretched supply-chain all played a part in exports that IndustryEdge estimates totalled 426,437 bdmt.

We project February’s exports will return to trend and will total 531,115 bdmt, based on our tracking of shipping movements.

The chart shows total woodchip exports on a monthly basis.

Australian Woodchips Exports: Jan ’14 – Feb ’19 (p) (kbdmt)

Source: ABS, GTIS & IndustryEdge estimates          

Note: March 2016 to May 2017 softwood chips are estimates

The table below shows Australia’s woodchip exports for November, and IndustryEdge’s December estimate and January projection.*

 

December
Woodchip Export

January
Woodchip Export Estimate

February
Woodchip Export Projection

596,956 bdmt (Hardwood)

426,437 bdmt

531,115 bdmt

72,468 bdmt (Softwood)

669,424 bdmt

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

* IndustryEdge’s Despatch to Shipment Ratio is detailed in Wood Market Edge. The Ratio provides up to ten week’s advanced notice of deliveries of woodchips to the global customers of Australian exporters.

 

This item was first published in the February 2019 edition of Wood Market Edge, Australia’s only forestry and wood products market analysis.

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