Bunnings is the largest hardware chain in Australia. When Australians think of timber they think of Bunnings. Bunnings sets the baseline when it comes to timber prices.
Bunnings two main timbers are Tasmanian Oak and Radiata pine. If you want timber other than these species you need to go to a specialist timber retailer. But Bunnings don’t show their prices on a per cubic metre basis, so I’ve done the homework.
Firstly the price list for kiln-dried, dressed, Select Grade Tas Oak as at June 2016:
Tasmanian oak is a native forest hardwood tree, so the costs of growing Tas oak are considerable in terms of management, regulation, roading, harvesting and transport. Most Tas Oak comes from public native forests managed by Forestry Tasmania. Forestry Tasmania is NOT run as a fully commercial profit-driven business, and has received considerable taxpayer subsidies over many years.
So these prices do not reflect the actual cost of growing the timber.
Prices range between $5,500 and $8,500 per cubic metre, with something of a trend of increasing prices for larger dimension timber to (perhaps) reflect the increased cost (to the taxpayer) of growing bigger, older trees.
Next is the price list for Radiata pine.
Radiata pine is a highly domesticated plantation-grown tree species, where scale, volume and efficiency dominate the market. It is grown primarily for the construction and pulp markets. The pine market is extremely competitive so these prices should accurately reflect the dynamic between supply and demand and the cost of production.
The other point to be made here is that Radiata pine must represent the absolute cheapest that solid wood of any kind can be commercially grown. It’s the bargain basement of solid wood prices.
The price list is for Standard grade pine, with Premium clearwood prices shown in yellow.
Growing Premium grade, knot-free pine requires thinning and pruning the plantations at significant cost compared to growing Standard grade, hence the higher price for Premium grade pine.
Does the 100% markup per cubic metre for the Premium pine make it more profitable for the grower? I hope so!
Prices for the Standard Grade pine range between $1,100 and $3,500, whilst Premium grade ranges between $2,400 and $3,500 per cubic metre for a limited range of sizes.
And here we have a retailer selling blackwood for the same price as radiata pine:
https://blackwoodgrowers.com.au/2015/10/19/blackwood-pricing-and-the-forest-industry-1/
It’s completely insane!
According to Bunnings Select grade Tasmanian oak is 2.5 to 5.2 times more valuable than Standard grade radiata pine (when comparing the same sizes), and 1.7 to 2.6 times more valuable than Premium pine.
Given that Tas Oak is much slower growing than pine and is a native forest species (ie. higher cost of production, lower productivity), one would think that a 2x times price premium can in no way reflect the relative costs of production!
No wonder then that our native forest industry is in such trouble with give-away prices like these.
Also given that Tasmanian oak is not generally regarded as a premium appearance grade timber and is relatively abundant, what would be the relative price of select grade blackwood, which is regarded as a premium timber and is relative scarce? Would it be 3.0 times the price of Premium grade pine, ie. $7,500 per cubic metre? Or 2.0 times the price of Select grade Tasmanian oak, ie. $12,000 per cubic metre?
Surely Tasmanian blackwood timber should be priced well above Tasmanian oak!!
For my previous reviews of timber (including blackwood) price lists see here:
Tasmanian Blackwood Growers Cooperative 
IST Blackwood Log Tender Results 2015-16
In the interests of greater market and price transparency in the forest industry here is my annual summary of blackwood log tender results from Island Specialty Timbers (IST) for the 2015-16 financial year.
This is the only publically available competitive market price data for blackwood logs.
http://www.islandspecialtytimbers.com.au
Unfortunately IST does not produce any market reports or annual summaries of their sales or other activities, which is why I produce this report every year.
During the year 15 lots were tendered across 9 separate tenders. These comprised 11 individual blackwood logs, and 4 log parcels totalling 70.4 cubic metres (100 logs at an average volume of 0.70 cubic metres per log). Total volume tendered was 91.1 cubic metres. This is less than 1% of all blackwood harvested from our public native forests.
This volume compares with 32 and 20 cubic metres of blackwood logs tendered in 2015 and 2014 respectively.
In addition to the IST tenders there were two tenders by Hydrowood during the year, run through IST, one of which included 16 premium blackwood logs totalling 21.4 cubic metres.
http://hydrowood.com.au/
You can read my review of this Hydrowood tender result here:
https://blackwoodgrowers.com.au/2015/12/11/tasmanian-blackwood-sawlogs-at-625-per-cubic-metre/
For the IST tenders the best result for the year was a small (0.68 cubic metres) plain-grain blackwood log (show in the above picture) that sold for $850 per cubic metre.
The worst result for the year was a 30 cubic metre parcel of 44 plain-grain logs that sold for a very low $100 per cubic metre.
One highlight for the year was a very large blackwood log that measured 4.35 cubic metres, with a length of 7.5 metres and a large-end diameter of 98 cm! Unfortunately this log had spiral grain and was deeply fluted so the sale price was only $275 per cubic metre.
Of the four parcels of logs tendered only 2 parcels sold totalling 34.6 cubic metres for an average price of $135.50 per cubic metre, average log volume of 0.72 cubic metres. These are small logs. The average volume of the Hydrowood blackwood logs that sold for $625 per cubic metre was 1.5 cubic metres. An average plantation grown blackwood sawlog contains 1.5 cubic metres.
The table below summarises the IST tender results for the 2015-16 financial year:
All up the IST tender results for 2015-16 are a mixed bag with indications of a soft market. This is indicated by the low prices for the figured grain logs, by the fact that half the volume put to tender failed to sell, and total blackwood tender sales revenue ($10,096) was 50% down on last year. The real stand out result for the year was the Hydrowood tender at $625 per cubic metre for a large parcel of good size plain-grain logs.
For what it’s worth here is a chart showing IST blackwood log tender price trends for the past 3 years:
Unfortunately the volume of IST blackwood tender material is too small and the quality too variable to allow meaningful market/price comparisons between years. Much of the material is of poor quality, or in the case of the log parcels, the logs are of small size compared to what would be produced in a well managed blackwood plantation. Large volumes of large, good quality logs from blackwood plantations should generally command better prices than shown by the IST result.
Wouldn’t it be great if this chart represented more meaningful data?
So whilst an increasing (if still miniscule) volume of blackwood log is being put to public tender by IST, the volume of quality blackwood sawlog from public native forest continues to decline. Half of the volume of special timbers now harvested from public native forest in Tasmania constitutes “non-millable” material in order to make up the politically correct headline figure.
Despite the fact that blackwood comprises over 80% of the volume of special timbers harvested from Tasmania’s public native forests, it comprises only 15% of the volume put to tender by IST. The blackwood market desperately needs more tradability, more transparency and much more commercial credibility.
Caveats:
So whilst Forestry Tasmania, the State government and the State parliament all regard the special timbers industry as a taxpayer-funded community service and political play-thing rather than a commercial opportunity, then blackwood’s commercial future remains difficult.
“The lack of price transparency for forest products, particularly from hardwood forests/plantations [in Australia], represents an impediment to the uptake of farm forestry. Unlike other commodities, price information for forest products is not published through the newspaper or accessible online. Better price transparency is required to encourage smallscale investment in trees” (p. 71. FWPA Report PN: PNA243-1112/2, 2013).
http://www.fwpa.com.au/rd-and-e/market-access/229-the-case-for-renewed-development-in-plantations-identifying-forest-values-and-the-constraints-to-attainment-stage-one-and-two.html
This quote from a recent forest industry report says it all. Even the forest industry recognises price transparency is a major issue, but then does nothing about it.
When will Tasmania get a fully commercial, profitable forest industry, based on profitable tree-growing?
For previous years IST tender reviews see:
https://blackwoodgrowers.com.au/2015/06/18/ist-blackwood-sawlog-tender-results-2014-15/
https://blackwoodgrowers.com.au/2014/06/14/blackwood-sawlog-tender-results-2013-14/
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Posted in Commentary, Hydrowood, Island Specialty Timbers, Markets, Prices
Tagged Log Tender Results