Price List from Hell Revised

Ok I need to check the fine print!

My original assessment of this sellers blackwood price list was pretty harsh.

https://blackwoodgrowers.com.au/2015/11/04/another-blackwood-price-list-from-hell/

But when I read the fine print about kiln-drying costs and length price premiums, things don’t look quite so bad.

Here’s what the revised price list looks like when kiln drying costs are included and the 30% length price premium is added.

These prices are for rough-sawn kiln-dried select grade blackwood.

BPL3KD

Excluding the 25×19 size blackwood, the average price for the kiln-dried blackwood for lengths up to 4.8 metres is $5,500 per cubic metre, and $7,100 per cubic metre for lengths over 4.8 metres.

I think these are good starting prices for the smaller size boards. But the price list still excludes the cost of time to grow the larger trees from which the bigger boards must be sawn.

This price list still tells us that larger older trees are cheaper to grow than smaller younger trees! This is the complete opposite of reality!!

The fact that the price list includes a significant price premium for length BUT NOT for width and thickness is illogical. There is a small price premium for increasing width and thickness but it declines with increasing size. This is what the linear trendline shows.

This price list tells the marketplace that growing commercial blackwood is potentially profitable (especially if the grower does their own sawmilling and drying), but not the growing of larger older trees.

The objective in a commercial blackwood plantation is to produce 6 metre long sawlogs hence potentially attracting the 30% length price premium.

So what do these sawn blackwood prices mean for blackwood growers and the future of the blackwood industry?

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2 responses to “Price List from Hell Revised

  1. Gordon, perhaps some experience with milling and drying may help you understand the whole process a bit better. Smaller diameter trees are far more expensive to harvest and process on a cubic meter basis. Then there is far less demand for the large dimension material and thus perhaps the unusual scenario of seemingly no price premium for the really wide boards – the reduced costs along the way goes some way to explaining this. Then there are all the faults to cut out once dried to produce that clear grade, often more faults with smaller diameter trees.

    • Hi Floyd,
      Smaller trees may be more expensive to harvest and process than larger trees, but those costs pale into insignificance compared to the cost of growing trees for another 5, 10 or 15 years to produce the bigger timber sizes.

      But the lack of a price premium for bigger boards in this price list and this one https://blackwoodgrowers.com.au/2015/10/19/blackwood-pricing-and-the-forest-industry-1/ are unique amongst the timber price lists I’ve seen. All other price lists (and I will post some more in the coming weeks) I’ve seen for a wide range of species have price premiums for bigger sizes. Even Radiata pine!!

      So I understand the need for some price premium for small sizes, but I don’t understand the lack of a price premium for larger sizes.

      I suspect it reflects the fact that the grower is Forestry Tasmania who do not operate on a commercial basis, and regard blackwood as a community service. In other words theses are not real market-based prices.

      Cheers

      Gordon

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