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The State of Timber in Australia: Market Forces

On the surface, it looks like timber suppliers in Australia have it easy. There is plenty of timber in Queensland and NSW, and there are plenty of trucks. It should be easy to find high quality, local timber and put it up for sale at fire sale prices. However, there is a lot more to it than that. We work hard to find high quality timber and sell it at prices that beat the competition. If it was easy, everybody would be able to do it.

Continuing our series covering the Forest Industry Advisory Council (FIAC) report to the Queensland Minister for Agriculture, here is a look at the outside market forces that affect the availability, quality and prices of timber in Australia.

The Current Market

In 2012-13, the Australian timber industry produced 1.3 million m3 of wood-based panel products. It also produced 3 million tonnes of paperboard products and paper. The biggest production was, as one would expect, 4.6 million m3 of sawnwood products.

While much of this is sold domestically, a lot is exported, too. However, Australian timber is faced with competition from imports and technology that replaces timber products such as paper.

In the construction industry, softwood sawn timber is used for roof trusses and wall framing, while hardwood is used for joinery, flooring and furniture. Wood-based panels, such as particleboard and fibreboard, are also used in housing construction, joinery and flooring. Writing paper, newspaper, packaging and sanitary paper are also derived from timber.

The process of deciding what goes where is described by the FIAC as a “cascading value chain” that starts with logs. The highest quality logs go to veneer and sawnwood products. Lower quality logs are used for paper and engineered wood. Wood fibre also finds its way into the bioenergy and biochemical markets.

These markets and this supply chain is important. The timber products sector is dependent upon there being a market for all of these forest products. While the population increase has resulted in an increase in the use of forest products, per capita use of sawnwood products has decreased nearly 30% in the last forty years. Over the same period, per capita usage of wood panel products has gone up 150% while paperboard and paper products have gone up 40%.

Globally, we imported approximately $2 billion more in forest products than we exported on an average for the years 2002-2013. For 2012-13, the lowest category of imports was sawn hardwood; we only imported 9% and used 91% domestic timber. The highest category of imports was printing and writing paper; we imported 83% and only used 17% domestic paper for writing and printing. Another product that was almost solely imported: plywood, with 75% imported and 25% coming from domestic sources.

The Trends and What They Mean

The numbers say that we tend to export more sawn timber and import more manufactured products. We imported $209.9 million in plywood in 2013-14 and $2.1 billion in paper and paperboard. We only imported $468.5 million in sawnwood in 2013-14. Most of that was from NZ, Chile, Canada and the Czech Republic.

The demand for domestic timber is projected to grow at roughly the same rate as the population. We currently have a population of 23.7 million. This is expected to increase to 34 million by 2040. If the numbers stay as they are, that would result in a 43% increase in demand for Australian timber by 2040.

Market Influences

With such a huge supply of timber in Australia, the timber market is driven almost solely by demand. Long term influences include environmental regulations affecting the amount of forests available for harvesting, demographic factors and economic cycles.

For example, whether globally or in Australia, a change to higher density housing means that more apartment and condo buildings will be built and less timber will be used as building materials per capita. In addition, there is always pressure on Australian timber manufacturers to stay competitive in the international market.

We hope this has been informative. For any questions about timber or to enquire about ordering, call Narangba Timbers today on 1300 477 024.