About the Timber Market SurveyThe quarterly Timber Market Survey (TMS) report presents Australian timber price movement data collected through the quarterly surveying of a representative range of timber product traders in eastern Australia. The TMS collects data on the movement in buying price of a wide range of timber products purchased and stocked by survey participants. Price movement data is presented in nominal terms unless otherwise stated. All TMS reports contain price trend results for softwood timber, panels and engineered wood products. In addition, the June and December quarter reports contain price trend information for a range of hardwood products. Note: Price changes in this report are based solely on TMS survey data; individuals may experience different price movements in their own markets.

Timber Market SurveyJune quarter 2019

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Key messagesQuarterly price movements - for softwood products »Downward price movements for untreated structural MGP10 and MGP12 products ranged between -2.1% and -1.1%.

»Marginal price movements for treated decking and sleeper products within +/-0.3%.

»Upward price movements for panel products ranged between 0.3% and 0.9%.

»Mixed price movements for engineered wood products ranged between -1.0% and 1.3%.

Six monthly price movements – for hardwood products »Upward price movements for most structural hardwood products ranged between 2.0% and 5.3%.

»Upward price movements for most hardwood flooring products ranged between 0.4% and 4.8%.

Softwood price changes – June quarter 2019

Structural softwood timberThe June quarter TMS has shown price decreases for untreated MGP10 and MGP12 structural timber products (Table 1). Prices for MGP10 products moved downwards by around 2.0%, while price movements for MGP12 products ranged between -1.5% and -1.1%. Treated F7 structural timber prices also declined, with price movements ranging between -1.4% and -0.9%.

Anecdotal reports from TMS participants suggest price discounting was inconsistent across the suite of structural timber products in the market, and that discounting was most prevalent in imported timber products.

Table 1: Structural softwood timber - nominal price changes to June quarter 2019

Product Dimension 12 months to 3 months to (mm*) Jun-19 Jun-19

MGP 10 70 x 35 x 4.8m 1.95% MGP 10 90 x 35 x 4.8m 2.09% MGP 12 70 x 35 x 4.8m 1.47% MGP 12 90 x 35 x 4.8m 1.07% F7 - H3 treated 70 x 35 x 4.8m 0.91% F7 - H3 treated 90 x 45 x 4.8m 1.38%Source: Timber Market Survey * unless otherwise stated

↑↑↑ 1.09%

3.28% 0.01% 2.83% 1.56% 1.65%

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Outdoor softwood timberPrice movements for treated decking and sleeper products were marginal over the June quarter, and were within +/-0.3% (Table 2). The latest results follow similar price movements seen in the previous (March) quarter, reflecting a slowdown in outdoor timber price growth in 2019.

Nominal prices for outdoor products remained significantly higher than 12 months ago.

Table 2: Outdoor softwood timber - nominal price changes to June quarter 2019

Product Dimension 12 months to 3 months to(mm*) Jun-19 Jun-19

Treated decking 90 x 20

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7.60% 0.31% Treated sleepers 200 x 75 x 2.4m 5.57% 0.29%Source: Timber Market Survey * unless otherwise stated

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Historic structural and outdoor timber product indicesTMS indices for MGP10 and MGP12 products have recently dropped from record levels set in late 2018 (Figure 1). The first half of 2019 has seen the MGP10 index decline by 2.8 index points, while

Timber Market Survey June quarter 2019

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Table 3: Panel products - nominal price changes to June quarter 2019

Product Dimension 12 months to 3 months to (mm) Jun-19 Jun-19

Plywood C/D Grade 2400 x 1200 x 12 0.36% 0.90% Plywood C/D Grade 2400 x 1200 x 17 ↑ 0.36% 0.54% Particleboard T&G 3600 x 900 x 19 ↑ 1.35% ↑ 0.50%

Particleboard T&G 3600 x 900 x 22 ↑ 0.72% 0.34% MDF 2400 x 1200 x 16 2.10% 0.62% MDF 2400 x 1200 x 18 2.17% 0.90%Source: Timber Market SurveyMulti-state price movements may comprise all three or only two surveyed state results

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Table 4: Engineered wood products - nominal price changes to June quarter 2019

Product Dimension 12 months to 3 months to (mm) Jun-19 Jun-19

I-joist/I-beam 240 x 47 0.72% 1.01% I-joist/I-beam 300 x 63 1.34% 0.64% LVL 200 x 36 4.72% 0.89% LVL 300 x 45 5.29% 1.29%Source: Timber Market SurveyMulti-state price movements may comprise all three or only two surveyed state results

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Figure 1. Quarterly nominal TMS indices for key softwood timber products

Softwood price changes – June quarter 2019 continued

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MGP 10 MGP 12 Treated F7 (H3) Treated decking Treated sleepers

mixed. I-joist/I-beam prices moved downwards and ranged between -1.0% and -0.6%, while prices for LVL products moved in the opposite direction and ranged between 0.9% and 1.3% (Table 4).

Nominal prices for LVL products remained consistently higher (up to 5.3%) compared to 12 months ago, while nominal prices for I-joist/I-beam products ranged between 0.7% lower and 1.3% higher than 12 months ago.

the MGP12 index has declined by 3.6 index points since the September quarter of 2018. The TMS index for treated F7 products has also declined in 2019, decreasing by 1.8 index points. This downturn in index growth has occurred against a backdrop of softening housing markets and increased imports of structural timber.

TMS indices for treated decking and sleeper products remained close to their long term peak levels. However, following nearly two years of exceptionally strong growth, indices for both products have declined slightly in 2019.

Source: Timber Market Survey. The reported price movements are based on weighted average price changes across Victoria, New South Wales and Queensland using TMS State Weightings of 41%, 31% and 28% respectively. Multi-state price movements may comprise all three or only two surveyed state results. Note: MGP10, MGP12 and treated F7 indexes are derived by combining price movements from two similar product dimensions. Each product index is weighted as follows: 40%

Historic panel and engineered wood product indicesTMS indices for panel and engineered wood products remained at or close to their long term peak levels (Figure 2). Following two consecutive quarters of index growth in 2019, the plywood index remained 1.4 index points below its record level set in the March quarter of 2009. At the end of the June quarter 2019, the I-joist index remained at a similar level (1.5 index points) below its peak in the September quarter 2018.

While the particleboard index has experienced the most growth over the long term, the LVL index has shown a significant increase over the last 18 months, increasing by 12 index points. The particleboard index increased by 8.5 index points over the same 18 month period, while MDF products have shown the least growth in that time, increasing by less than 2 index points. Panel products

The June quarter TMS has shown small to moderate upward price movements across the panel products range (Table 3). Price movements for plywood and MDF products ranged between 0.5% and 0.9%, while price movements for particleboard products were slightly lower and ranged between 0.3% and 0.5%.

Nominal prices for panel products remained higher than 12 months ago, with the exception of MDF (18mm) prices, which were 2.2% lower.

Figure 2. Quarterly nominal TMS indices for key panel products and engineered wood products

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I-joist LVL MDF Plywood C/D grade Particleboard T&G

Engineered wood productsJune quarter price movements for engineered wood products were

Source: Timber Market Survey. The reported price movements are based on weighted average price changes across Victoria, New South Wales and Queensland using TMS State Weightings of 41%, 31% and 28% respectively. Multi-state price movements may comprise all three or only two surveyed state results. Each product index is calculated using a simple average of two sampled product dimensions.

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Timber Market Survey June quarter 2019

Hardwood price changes – six months to June 2019

Source: Timber Market Survey. The reported price movements for kiln dried product grades are based on weighted average price changes across Victoria, New South Wales and Queensland using TMS State Weightings of 40%, 38% and 22% respectively. Multi-state price movements may comprise all three or only two surveyed state results.

Structural hardwood timberMost structural grade hardwood products monitored by the TMS have shown moderate to strong upward price movements over the six months to the end of June (Table 5).

F27 products (higher strength grades) showed the largest upward price movements within the kiln dried product range, with price movements of 4.5%. Price movements for strength grade F17 products ranged between 2.0% and 2.4%.

Victorian green sawn F8 products showed price movements of 5.3%, while New South Wales green sawn F11 product prices remained stable.

All structural grade hardwood products in Table 5 remained at a higher nominal price point compared to 12 months ago.

Table 5: Structural hardwood timber products - nominal price changes to June 2019

Product Dimension 12 months to 6 months to (mm*) Jun-19 Jun-19

Kiln dried (KD) structural timber F17 90 x 45 x 4.8m ↑ 3.65% ↑ 2.41% 90 x 45 x 2.4/2.7m ↑ 4.01% ↑ 2.03% 190 x 45 x 4.8m ↑ 3.67% ↑ 1.97% F27 90 x 35 x 4.8m ↑ 5.31% 4.47% Green timber F8 (Victoria) 100 x 50 x 4.8m ↑ 5.77% 5.33% F11 (NSW) 100 x 50 x 4.8m ↑ 0.66% 0.00%

Source: Timber Market Survey * unless otherwise stated

F17 F17

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Hardwood flooring productsSouthern species of hardwood flooring products have shown the strongest upward price movements over the six month reporting period; with Victorian ash price movements ranging between 3.2% and 4.8%, and Tasmanian oak price movements ranging between 1.8% and 2.9% (Table 6). Table 6: Hardwood flooring products - nominal price changes to June 2019

Product Dimension 12 months to 6 months to (mm) Jun-19 Jun-19

Flooring products Vic ash – Select grade (Vic) 100 x 25 3.94% 3.22% Vic ash – Standard grade (Vic) 100 x 25 8.82% ↑ 4.84% Tasmanian oak – Select grade (Vic) 100 x 25 5.48% ↑ 2.94% Tasmanian oak – Standard grade (Vic) 100 x 25 6.43% 1.80% Blackbutt – Select grade 100 x 25 2.60% ↑ 1.51% Blackbutt – Standard grade 100 x 25 3.47% ↑ 1.14% Spotted gum – Select grade 100 x 25 ↑ 0.11% Spotted gum – Standard grade 100 x 25 1.22% ↑ 0.44%

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Source: Timber Market Survey. The reported price movements for Blackbutt and Spotted gum flooring are based on weighted average price changes across Victoria, New South Wales and Queensland using TMS State Weightings of 40%, 38% and 22% respectively. Multi-state price movements may comprise all three or only two surveyed state results.

Note: Price movments for Victorian ash and Tasmanian oak flooring reflect the Victorian market prices only, as a three state TMS average result was not able to be derived for the six months to June 2019

Historic hardwood structural and flooring product indices The long term TMS index trends for key hardwood structural products and standard grade flooring products are shown below (Figure 3). Most product indices have followed a reasonably steady upward trajectory over the long term. The Victorian ash flooring index has shown a stronger upward trajectory since the second half of 2017 to reach 50 index points above its starting position. Market commentary received from some TMS participants over the last 12 months suggest the supply of Victorian ash products has to some extent become more constrained and therefore more expensive to purchase.

The Blackbutt flooring index and the F27 structural grade index have shown the most growth over the long term, with both indices increasing by around 52 index points since 2008. Over the same period, the Spotted gum flooring index has increased at a reasonably consistent rate to reach 37 index points above its starting position.

Following a period of steep index growth over parts of 2017 and 2018, the green sawn F11 structural grade index has remained relatively flat, but at the end of June 2019 was 49 index points above its starting position. The F17 structural grade index has shown the least growth over the long term, and at the end of June 2019 was 32 points above its starting position.

Figure 3. Six monthly nominal TMS indices for selected hardwood structural and flooring products

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F11 (100x50x4.8) F17 (90x45x4.8)

F27 (90x35x4.8) Blackbutt flooring (100x25)

Spotted gum flooring (100x25) Vic ash flooring (100x25)

Price movements for northern species flooring products were more subdued; ranging between 0.1% and 0.4% for Spotted gum products, and 1.1% and 1.5% for Blackbutt products.

All flooring product prices remained higher (in nominal price terms) than 12 months ago, with Victorian ash and Tasmanian oak products showing particularly strong annual price growth.

Source: Timber Market Survey. The reported price movements for F17, F27, Blackbutt, Spotted gum and Victorian ash flooring are based on weighted average price changes across Victoria, New South Wales and Queensland using TMS State Weightings of 40%, 38% and 22% respectively. Multi-state price movements may comprise all three or only two surveyed state results. All flooring products are ‘standard grade’. Reported price movements for F11 are based on NSW market prices only.

*Reported price movements for Victorian ash flooring in the 12 months to June 2019 are based on Victorian market prices only.

Timber Market Survey June quarter 2019

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The Timber Market Survey is prepared by Indufor. For more information about Indufor or the Timber Market Survey please contact:Con PsiroukisConsultantcon.psiroukis@indufor-ap.com

Funding provided by:

The Timber Market Survey (TMS) is prepared with funding from Forestry Corporation NSW; VicForests; HVP Plantations; HQPlantations; OneFortyOne Plantations; Queensland Government Department of Agriculture and Fisheries; Green Triangle Forest Products: AKD Softwoods; and Sustainable Timber Tasmania (‘the funding bodies’).

Indufor Asia Pacific (Australia) Pty Ltd (‘Indufor’) has prepared this report in accordance with the usual care and thoroughness of the consulting profession for the use of the funding bodies. It is based on generally accepted practices and standards at the time it was prepared. No other warranty, expressed or implied, is made as to the professional advice included in this report. It is prepared in accordance with the scope of work and for the purpose outlined in the Agreement for Provision of Consulting Services dated 12 April 2017. Indufor has made no independent verification of this information beyond the agreed scope of works and Indufor assumes no responsibility for any inaccuracies or omissions. No indications were found during our investigations that information contained in this report as provided to Indufor was false.

This report was prepared between 1 July 2019 and 23 August 2019, and is based on the conditions encountered and information reviewed at the time of preparation. Indufor disclaims responsibility for any changes that may have occurred after this time. This report should be read in full. No responsibility is accepted for use of any part of this report in any other context or for any other purpose or by third parties.