After a turbulent couple of years, timber prices are anticipated to increase again.
That is according to a Spinifex article by Riley Faulkner in the Fifth Estate.
It comes as the International Monetary Fund forecast soft sawnwood prices for Douglas fir to increase by 15 pr cent over the next 2 years.
Over the last 30 years leading up to February 2021, the export price of Douglas fir rose steadily from $U200 a cubic metre to $U334, experiencing a peak of $U372 in October 2006.
The price of soft sawnwood has experienced a tumultuous journey since February 2021.
From February to June 2021, the cost rose from $334 to $436 per cubic meter, only to drop to its lowest value of $294 three months later, which had not been seen since March 2017.
The most significant increase in value occurred five months after that when prices surged from $338 per cubic meter in February 2022 to $466 in the following month, a 38% hike. However, since the peaks of 2021 and early 2022, the price of soft sawnwood plummeted significantly from August 2022 to January 2023.
According to Faulkner, Douglas fire prices serve as a useful reference point for the Australian timber industry, which is increasingly import-driven.
“The per-unit-volume price of imports is expected to experience yet another rise as the construction industry deals with a combination of see-sawing demand, material shortages, and wild price swings.
In the article, Faulkner mentioned that the decrease in softwood lumber sales during the last couple of years resulted from the expanding globalized world. The interdependence of industries, markets, commodities, and nations has led to a scenario where outside factors can substantially influence industries with limited power over them.
Recent price falls are primarily due to an oversupply and a slowing down of demand.
According to HIA chief economist Tim Reardon “What happened is that builders have over-ordered in timber. You ran short of it; your natural response is to over-order. Drive around most residential suburbs right now, and you see a concrete slab with a pile of timber sitting on top of it.”
“We expect the price to steadily increase to $355 a cu m in January 2025 and beyond – perhaps a hint that prices might finally stabilise, providing much-needed respite from the erratic past couple of years,” Mr Faulkner said.
The bushfires in the summer of 2019-2020 burnt 8.43 million hectares of native forests and 130,000 hectares of plantations in eastern and southern Australia. Coupled with the introduction of a native forest harvesting ban in Western Australia by 2024, and a phasing-out in Victoria between 2024 and 2030, a shortage in domestic timber stock has and will continue to occur.
Faulkner suggests that the $688 million Homebuilder scheme has accelerated the building demand.
“The shortage of domestic timber stock and increased building demand led to the increase in timber imports. In 2020, Australia imported $US249 m in sawnwood, with the top three exporters to Australia New Zealand (28.9 per cent), Germany (10.4 per cent) and Estonia (9.27 per cent),” he continues.
“In 2021, however, Australia’s importation of sawnwood increased by 147 per cent to $US617 m (making it the 19th largest global importer), with Germany (24.1 per cent), New Zealand (20.5 per cent) and Sweden (7.95 per cent) taking out the top spots.”
- Riley Faulkner is architectural designer with Tentacle CM&I. Tentacle Computing Machinery and Intelligence (CM&I) is a team of physicists and mathematicians solving delivering data and predictive analytics, industry-tested across sectors including health, commodities, and energy.