Category Archives: Island Specialty Timbers

IST Tender Results 2016-17 addendum

https://blackwoodgrowers.com.au/2017/07/27/ist-tender-results-2016-17/

Looking at how small some of the IST tendered logs are, I thought I’d create a chart showing average sold log volume.

ISTSoldVol

For some context to this chart, the target plantation blackwood log is 1.5 cubic metres in volume (DBH 60 cm pruned to 6 metres).

So you can see from the above chart that IST sold logs are pretty small. In fact given that the chart shows the average volume, some of them are downright tiny (less than 0.1cubic metres).

That these small logs can command such high prices is quite extraordinary.

I’ll include this chart in future reports.

 

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IST Tender Results 2016-17

ist

http://www.islandspecialtytimbers.com.au

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.

https://blackwoodgrowers.com.au/2016/12/13/island-specialty-timbers-tender-results/

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.

https://blackwoodgrowers.com.au/2017/06/12/ist-blackwood-log-tender-results-2016-17/

Six-monthly update

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.

Financial year

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:

https://blackwoodgrowers.com.au/2017/05/01/special-timbers-in-western-australia/

IST2017pricechart

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.

https://blackwoodgrowers.com.au/2016/11/13/special-timbers-subsidised-charade-continues/

Tasmanian taxpayers certainly have abundant generosity (and deep pockets) when it comes to the forest industry.

IST Blackwood Log Tender Results 2016-17

1617logs

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 2016-17 financial year.

http://www.islandspecialtytimbers.com.au

This is the only publically available competitive market price data for blackwood logs.

During the year 20 blackood lots, totalling 20.4 cubic metres, were put to tender over 5 of the 8 tenders held by IST. That equates to 1 single truck load of blackwood material! Of the 20 lots put to tender only 6 were sold, totalling 7.2 cubic metres!

It’s been a quiet year for the local blackwood market.

Last year (2015-16) Forestry Tasmania sold 9,580 cubic metres of blackwood logs and craftwood, with the vast bulk of this volume sold on private long term sales contracts. The tiny volume sold through public tender by IST represents just 0.07% of the blackwood harvested from the Tasmania’s public native forest.

http://www.forestrytas.com.au/about-us/publications

For the August and September 2016 tenders IST put to tender 7 lots comprising pairs of blackwood logs. In the August tender the pairs were logs cut from single trees, whilst in the September tender the pairs were from different trees. All were plain grain logs. Only 2 of the pairs from the August tender sold.

None of the 11 blackwood lots from the September and November 2016 tenders sold!

Then came the March 2017 tender where 2 large blackwood logs from the same tree featuring tear drop grain were put to tender. Total volume for these two logs was 2.59 cubic metres. The larger butt log went for $1575 per cubic metre whilst the smaller head log sold for $1625. Total value for this single blackwood tree totalled $4130!! These logs provided the highlight in an otherwise quiet year.

Actually despite the low volumes sold plain grain blackwood logs didn’t do so bad. The 4 plain grain lots that sold averaged $418 per cubic metre for some reasonable quality logs, with prices up to $550 per cubic metre. I regard that as a good price.

The table below summarises the IST blackwood tender results for the 2016-17 financial year:

IST 2017 BWD summary table

The 20.4 cubic metres of blackwood put to tender compares with the total of 166 cubic metres of specialty timbers that IST put to tender in 2016-17, or only 12% of the total volume. This is despite the fact that blackwood is by far the dominant specialty timber harvested in Tasmania.

The chart below shows the average blackwood tender prices and total volumes for the past 4 years.

IST BWD pricevolume trend

Unfortunately the volume of IST blackwood tender material is too small and the quality too variable to allow meaningful market/price comparisons between years. Also IST generally only caters to the local southern Tasmanian craftwood market.

Large volumes of large, good quality logs from blackwood plantations should generally command better prices than shown by the IST result.

The blackwood market desperately needs more tradability, more transparency and more commercial credibility.

The only basis for a successful forest industry is profitable tree growers within a competitive, transparent marketplace.

Caveats:

  1. Island Specialty Timbers (IST) is an enterprise of Forestry Tasmania established in 1992 to increase the recovery, availability and value of specialty timbers from harvesting activities in State forests.
  2. Forestry Tasmania manages its special timbers operations (including IST) as a taxpayer-funded, non-commercial, non-profit, community service. Last year each cubic metre of blackwood log harvested by Forestry Tasmania received a taxpayer subsidy of $86! No private blackwood grower received any taxpayer subsidy.
  3. Note that all logs and wood sold by IST come from the harvesting of public native old-growth forest and rainforest certified under AFS (PEFC).
  4. It is unlikely that this tiny set of market-based blackwood log prices is representative of the broader blackwood market.
  5. The dataset is too small and variable in quality to allow any analysis or correlations to be made between price and log quality apart from the obvious result that feature-grain logs attract a significant price premium over plain-grain.
  6. These tender prices are effectively mill door prices that already include harvesting and transport costs. They are not stumpage prices.

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. One of the authors of this report was none other than the Director of Forestry Tasmania!

For previous years IST tender reviews see:

https://blackwoodgrowers.com.au/2016/06/23/ist-blackwood-log-tender-results-2015-16/

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/

 

Special Timbers in Western Australia

FPCSTA

Forest Products Commission (FPC) of Western Australia (the Government forest agency) puts all special timbers that come from Crown land and State forest to public auction. The objective is not for the Forest Products Commission to maximise revenue (unfortunately that is not one of their corporate objectives), but to be impartial in terms of who gets access to the limited resource, and attempt to ensure some kind of fair market price is paid. I’m guessing much of this because the FPC actually tells us very little about their special timbers operations.

http://www.fpc.wa.gov.au/timberauctions

http://www.fpc.wa.gov.au/speciality-timbers-go-under-hammer

There are generally four auctions per year, the first for 2017 is this Saturday the 6th of May. Over 100 lots are to be auctioned this Saturday totalling over 1,000 tonnes of specialty woods.

Here’s the auctioneers website:

https://www.auctions.com.au/auctions/2017/05/06/wa-log-burl-burl-slices-craft-packs-and-slabs-auction.html

Western Australia doesn’t have a Special Timbers Management Plan. Whatever wood is salvaged from other activities on Crown Land and State forest is what special timbers are available and that’s it.

There are no taxpayer subsidies (that I can see anyway) and no logging of parks and reserves just to pander to the wood craft people.

In 2016 FPC auctioned approximately 3000 tonnes (approx. 3,000 cubic metres) of specialty timbers. That’s 150 truckloads of specialty timbers. Compare that with just 200 cubic metres tendered by Island Specialty Timbers/Forestry Tasmania last year.

The FPC is reluctant to talk about their specialty timbers operations, apart from announcing the auction dates. Here is the sum total of what the last FPC Annual Report had to say:

Local buyers bid keenly for a variety of Goldfields timbers for musical instruments, wood turning projects and unique pieces of furniture. Wood from this region is difficult to access, and bidders at the auction were impressed by the bold colours and patterns found in the timber.

Also on offer was a selection of South West native forest specialty feature timbers including marri, blackbutt and sheoak.

That’s it!!

Just some motherhood statements!!

No discussion about sales highlights, market conditions, total volume sold or total revenue.

If the FPC wanted to engage with stakeholders and the general public this would be a great opportunity. Apparently not!!

Like Forestry Tasmania the Forest Products Commission is not run as a commercial business but as a community service to achieve political objectives. Being a profitable tree grower is not the vision of either of these public forest managers.

Remember the only basis for a successful forest industry is profitable tree growers and public auctions are a great way to maximise profitability and create greater market transparency.

Island Specialty Timbers Tender Results

ist

http://www.islandspecialtytimbers.com.au

For the past three years I’ve been collecting, analysing and reporting blackwood log tender results from Island Specialty Timbers (IST) as, despite the miniscule volumes and generally poor quality, these are the only competitive blackwood log prices that are publically available.

Just for the fun of it I thought I would start collecting and analysing all the tender results. You never know what might turn up!

This data doesn’t have much market value. Besides blackwood, 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 best value this data has is to show what the marketplace might pay for premium quality timber. When Tasmanian public native forest oldgrowth and rainforest timbers are no longer available, will the marketplace come to better appreciate farm-grown Tasmanian blackwood?

Forestry Tasmania and the Tasmanian Government consider the management and harvesting of public native forest specialty timbers (including blackwood) as a taxpayer funded community service. So why does Forestry Tasmania/IST put these tiny volumes to tender and publish the results? What is the point?

Forestry Tasmania’s major product Tasmanian Oak has no price or market transparency. Why the need for competitive markets and price transparency for community-service specialty timbers, where there is no competitive markets and price transparency for eucalypt hardwood? It makes no sense!

IST was established ”to increase the recovery, availability and value of specialty timbers from harvesting activities in [Tasmanian] State forests”. Does IST achieve its stated objectives? Does it operate at a profit? We will never know!

Island Specialty Timbers has been operating for 25 years. In that time it has never produced a market report; and only in the last 3 years has Forestry Tasmania included IST sales highlights in its Annual Report.

http://www.forestrytas.com.au/about-us/publications

So far as I’m aware these are the only publically available competitive market log price results available anywhere in Australia!

30 million cubic metres of wood is harvested in Australia every year and all we have are competitive price results for less than 200 cubic metres! Isn’t that extraordinary??

Does the forest industry really want to encourage investment?

isttender-chart

The size and quality of products tendered by IST varies enormously so it is difficult to draw conclusions from these results.

Remember these prices are equivalent to mill door log prices, so harvesting and transport costs are theoretically included in the prices.

All up over the 15 months 210 cubic metres of logs were sold by tender with total revenue of $162,000. An additional $18,100 revenue was received by Forestry Tasmania directly from Tasmanian taxpayers to compensate for the costs of harvesting this 210 cubic metres.

87 cubic metres remained unsold from the tender process. Few of the logs tendered were of premium (Category 4) grade, most of which are sold under private long term sales agreements, including virtually all of the Huon pine.

Five species attract strong demand and high prices, these being black heart sassafras, plain white sassafras, king-billy and huon pine and leatherwood with average log prices over $1,000 per cubic metre. Celery top pine sold for an average price of $530 per cubic metre. All of these species take 400-1,000 years to reach maturity so I suspect even these prices are cheap.

And don’t forget these public native forest specialty timbers come to you courteously of an $86.27 per cubic metre direct taxpayer subsidy.

https://blackwoodgrowers.com.au/2016/11/13/special-timbers-subsidised-charade-continues/

Black heart sassafras and blackwood made up 25% each of the successful tendered volume over this 15 month period, but made up 46% and 6% of the sales revenue respectively. Blackwood comprised 55% of unsold log volume, perhaps suggesting that the local Tasmanian market for plain grain blackwood is saturated. This is not surprising given you can buy plain grain select blackwood timber in Tasmania for the same price as Radiata pine.

https://blackwoodgrowers.com.au/2016/11/12/blackwood-timber-price-list-summary-2016/

The harvesting of specialty timbers from Tasmanian public native forests is neither profitable nor sustainable.

I will provide an update on IST tender results every six months.

IST Blackwood Log Tender Results 2015-16

IST 0815 log23double

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:

IST_Annual table_16

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:

IST_Annual chart_16

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:

  1. Island Specialty Timbers (IST) is an enterprise of Forestry Tasmania established in 1992 to increase the recovery, availability and value of specialty timbers from harvesting activities in State forests.
  2. Forestry Tasmania manages its special timbers operations (including IST) as a taxpayer-funded, non-commercial, non-profit, community service. Last year each cubic metre of blackwood log harvested by Forestry Tasmania received a taxpayer subsidy of $82! No private blackwood grower received any taxpayer subsidy.
  3. Note that all logs and wood sold by IST (excluding the Hydrowood logs) come from the harvesting of public native old-growth forest and rainforest certified under AFS (PEFC).
  4. It is unlikely that this tiny set of market-based blackwood log prices is representative of the broader blackwood market.
  5. The dataset is too small and variable in quality to allow any analysis or correlations to be made between price and log quality apart from the obvious result that feature-grain logs attract a significant price premium over plain-grain.
  6. Remember also these tender prices are effectively mill door prices that already include harvesting and transport costs. They are not stumpage prices.

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.

  1. One of the authors of this report was none other than the recently appointed Director of Forestry Tasmania. Does this mean we will see greater transparency and competition at FT?

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/

Record price for blackwood sawlog at tender!!!

The results of the August 2015 tender at Island Specialty Timbers have just been posted.

http://www.islandspecialtytimbers.com.au

Two small blackwood logs were included amongst the 27 lots tendered.

One of the logs (Lot 23) was a plain-grain Utility Grade (NOT Cat 4) blackwood log. The description read:

A good straight log, several bumps, attractive dark stripes in growth rings at butt end. Length 2.7 metres, large end diameter 64 cm, small end diameter 50 cm, volume 0.68 cubic metres.

IST 0815 log23double

This small log sold for the incredible price of $850 per cubic metre!

This is by far the greatest price ever paid for a plain grain blackwood log.

Remember that a commercial blackwood plantation aims to grow sawlogs that are 6.0 metres in length and an average volume of 1.5 cubic metres. The above tendered log would represent the lower half of such a plantation-grown blackwood log.

In other words at this price a single plantation blackwood log could be worth $1,275!

At 300 cubic metres sawlog per hectare that equates to $250,000 per hectare at harvest for a blackwood plantation.

Remember these prices are equivalent to mill-door delivered prices, so harvesting and transport costs need to be deducted to approximate stumpage paid to the grower.

And this is only one small, low quality log sold at tender in Smithton, north west Tasmania.

The other Cat 4 blackwood log sold for $550 per cubic metre.

This is an extraordinary price for a small plain-grain blackwood sawlog and again demonstrates the commercial potential of farm-grown commercial blackwood.

Is anyone interested?