Margules Groome’s Australian Softwood Residual Log Price Index measures domestic softwood plantation residual log prices (excluding exports). The index is a measure of the residual log value to the forest owner once harvest and haulage costs are subtracted from mill door log prices. It is a measure of the forest owners log margins, or the spread between log prices and logistics costs.
Sources: ABS, TMS, AIP, KPMG APLPI, FRED, IHA GTA, Margules Groome
The latest edition of the index indicates margins have stabilised over the past year. Logistics costs have plateaued owing to a ~6% decrease in fuel prices in the March quarter (Q1 2019), but they have increased by ~4% again to June (Q2 2019) – overall remaining relatively flat for 2019 YTD. Unfortunately, mill door log prices have followed suit, an indication of the more difficult trading conditions being experienced in the domestic timber market with softening demand and stockpiling of finished product.
The index is 19% down on its peak in the March quarter 2016 and in slow decline, although still 17% up on the low of March quarter 2013. Assuming, fuel costs don’t increase dramatically and timber stocks are managed down without significant price discounting, the index should remain steady for the last half of 2019.
For further information and analysis contact Margules Groome.