Back in December last year I wrote my first report summarizing all tender results for Island Specialty Timbers given that IST itself provides little market information.
So here is my half yearly update and financial year summary of their tender results.
A separate report looks specifically at IST blackwood tender results, given that blackwood is the only specialty timber species for which this information might have some use for market and investment purposes. No one is going to invest money based on the tender results for the other specialty species, which are too slow growing to allow for profitable investment.
The last 6 months have seen 4 IST tenders with total volume of 83 cubic metres of specialty timbers put to tender of which 58 cubic metres were sold, and total revenue of $49,100.
The 12 months to June 2017 saw IST conduct 8 tenders with total volume of 166 cubic metres of specialty timbers of which 107.5 (64%) cubic metres sold for total revenue of $114,300.
This 166 cubic metres represents about 1% of the annual harvest of special timbers from Tasmania’s public native forests. The rest is sold at Government prices on long term sales contracts.
For harvesting the 166 cubic metres of special timbers in the year Forestry Tasmania received an additional $14,000 from Tasmanian taxpayers as compensation.
Compare this with the 3,000 tonne of specialty timbers auctioned by the Western Australian Forest Products Commission every year:
The above chart shows the log volumes and average unit prices paid per tender.
The price spike for December 2016 reflects a tender of 7 Huon pine lots.
The highest unit price for the year was a small black heart sassafras log of 0.49 cubic metres that sold for $5,100 per cubic metre!! This is an extraordinary price for such a small log.
The highest total price paid for a log was for a Huon pine log of 1.75 cubic metres that sold for $5,160.
These results show that when subject to competitive forces even the little southern Tasmanian special timbers market can afford to pay very good prices for quality logs.
Three species attracted strong demand and high prices over the year, these being black heart sassafras, huon pine and banksia with average log prices over $1,000 per cubic metre. Celery top pine sold for an average price of $630 per cubic metre. All of these species take 400-1,000+ years to reach maturity so I suspect even these prices are cheap.
Black heart sassafras made up 25% of the successful tendered volume but made up 44% of the sales revenue. Blackwood, the dominant special timber, made up 7% of the successful tendered volume but only 5% of the revenue. Huon pine made up 20% tendered volume and 11% revenue.
Black heart sassafras, blackwood, myrtle and wattle comprised 15%, 24%, 16% and 20% respectively of unsold log volume.
The low volume and variable quality of products tendered by IST makes it difficult to draw conclusions from these results, except to repeat that quality wood is worth big money.
Remember these prices are equivalent to mill door log prices, so harvesting and transport costs are theoretically included in the prices.
And don’t forget these public native forest specialty timbers come to you courteously of an $86.27 per cubic metre direct taxpayer subsidy.
Tasmanian taxpayers certainly have abundant generosity (and deep pockets) when it comes to the forest industry.