This is my annual summary of Island Specialty Timbers (IST) log tender results.
Island Specialty Timbers is the only source of competitive, transparent log prices anywhere in Australia, including blackwood sawlog prices.
That simple statement tells us a great deal about the dire condition of the forest industry in Australia.
IST is a business enterprise of Sustainable Timber Tasmania (STT) which sources and retails raw material of Tasmanian specialty timbers from harvest or salvage operations conducted on State owned Permanent Timber Production Zone land (PTPZl).
IST is not really a “business” just as the State forest agency Sustainable Timber Tasmania is not a business either. Logging of public native forest in Tasmania requires significant taxpayer subsidies every year.
You can read my previous annual tender summaries here:
IST conducted 10 log tenders during the year with 286 cubic metres of special species logs put to public tender. Tasmania defines “special species” as any native forest timber apart from plain grain Tasmanian oak.
This is the important bit……
2022 was another champagne year for blackwood, continuing the strong market demand and prices from 2021.
2021 was the year that plain-grain blackwood sawlog broke the $1,000 per cubic metre price barrier. 2022 continued that trend with a record price of $1,150 per cubic metre.
The chart below shows blackwood sales results for the year.
A total of 15 blackwood logs (21.7 cubic metres) were put to tender this year, all of it plain grain. All logs were sold, for an average price of $643 per cubic metre, or a total of $13,950. Average log volume was 1.45 cubic metres – a good size sawlog!
A stand-out result for the year was a massive 2.46 cubic metre blackwood log that sold for $925 per cubic metre, with a total price of $2,276!
The above chart shows a return to strong demand and strong prices for quality plain grain blackwood sawlogs following the pandemic year of 2019-20, with maximum and average prices showing strong increases.
This is the greatest volume of blackwood that IST has put to tender for quite some time, despite the fact that blackwood makes up more than 90% of special species harvested from public native forest in Tasmania. Generally ~9,000 cubic metres of blackwood is harvested annually with 99.999% being sold at heavily discounted Government prices on long term sales contracts.
The Tasmanian government dominates and undermines the blackwood log and timber market. These log tender results need to be interpreted bearing this fact in mind.
Premium plain grain sawlogs are what can be grown in blackwood plantations.
Will this result capture the attention and imagination of Tasmanian farmers?
The following chart shows the average size characteristics of plain grain blackwood logs sold at IST tender. The target sawlog from a blackwood plantation has a volume of 1.5 cubic metres and a small end diameter (SED) of around 50 cm.
Remember these IST tender sales represent tiny log volumes sold into the small southern Tasmanian market. They represent mill door prices not stumpages.
Imagine if IST put 10 cubic metres of blackwood sawlog at each tender (100 cubic metres per year) to attract mainland and maybe even overseas buyers.
Imagine if State government forest policy was about profitable tree growers and not sawmill welfare.
Imagine what that change would do for the forest industry and Tasmanian farmers!
These positive blackwood log market signals should be resulting in more blackwood plantations being established, helping to build the industry and make Tasmanian farmers more profitable.
One hectare of well managed blackwood plantation has the potential to produce approx 300 cubic metres of premium sawlog after 30 – 35 years. At $1,000 per cubic metre that equates to $300,000 per ha in todays market.
Overall IST put 286 cubic metres of specialty timbers to tender in 2021-22 of which 13.8 cubic metres was not sold. Total tender revenue was $230,400.
Last year Sustainable Timbers Tasmania sold 8,825 cubic metres of specialty timbers, so these competitive tender sales represent a mere 3% of specialty timber sales from public native forests in Tasmania.
With the exception of the July 2021 and May 2022 tenders, the tender results were poor with maximum and average prices well down on previous years (see chart below).
The July 2021 tender was dominated by Black heart sassafras logs which generally attract high prices, whilst the May 2022 tender was dominated by Black heart sassafras, Tiger myrtle and figured Huon pine, all of which are premium species attracting premium prices. These tender results show that the market is still prepared to pay premium prices for rare, quality logs.
It was at the latter tender that a new record IST tender price was set for a special species sawlog. This log was a 0.94 cubic metre Tiger myrtle log that sold for $6,100 per cubic metre, total price $5,734!
The following chart shows the volume and price summary for 57 log tenders back to 2015.
The tiny volumes and wide variability in species and quality of logs that IST put to tender makes assessing market trends over time difficult.
The next chart shows the average volume of the sold logs. Here there is a clear trend of diminishing log size. If it wasn’t for the occasional large eucalypt log IST throws into the tender mix, this trend of diminishing log size would be even more pronounced. The last 12 months shows a steady decline in log size so it is not surprising that prices have reflected a general decline in log quality.
The following 2 charts show the above data summarised by year:
Continuing the trend from last year 2021-22 saw a “significant” volume of specialty species logs put to tender. Despite the higher volumes, average prices have declined, probably in part due to declining log quality.
The average price for all species put to tender in 2022 was $844 per cubic metre, well down from $1,043 per cubic metre in 2021.
The above chart shows a steady rise over the last 4 years in the maximum price paid for these dwindling ancient timber resources, whilst average and minimum prices remain relatively steady.
The main focus of IST tenders is black heart sassafras (Atherosperma moschatum) which can command very high prices for good logs. It made up 35% of log volume put to tender in 2022.
However the tree is slow growing (500+ years to reach commercial size) and is restricted to rainforest and old growth eucalypt forest, so supplies of this species are dwindling.
Blackwood made up just 8% of the volume IST put to tender.
Unfortunately the marketplace continues to show strong support for the plundering of the last of Tasmania’s ancient forests!