Timber Market Survey. Key messages. Economic & construction update. Contents JUNE QUARTER 2011

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1 Timber Market Survey JUNE QUARTER 2011 Contents Economic & construction update Imports and exports Softwood price changes June quarter Long term softwood price trends Hardwood price changes six months to June Long term hardwood price indexes References Key messages National dwelling construction approvals fell over the June quarter 2011 by around 3.5%, which was mostly derived from declines recorded in Queensland and South Australia; Prices for structural softwood and engineered wood products fell over the June quarter. MGP12 prices experienced the largest declines, which contributed to a 12 month fall of around 4%; Kiln dried structural products F17 and F27 experienced increases of 1.2% and 2.4% over the six months to June 2011; and Price movements for appearance grade hardwood fl ooring and sawn and dressed board products varied in the six months to June 2011, from 1.0% for select grade Victorian Ash boards to 3.7% for standard grade Blackbutt fl ooring. Economic & construction update In August, the Reserve Bank of Australia (RBA) revised its growth forecast over 2011 down to 3.25% from the May 2011 forecast of 4.25% 1. This followed the release of the March quarter 2011 Gross Domestic Product (GDP) growth fi gures which showed a decline of 1.2% 2. The RBA indicated that recent GDP results have been affected by extreme weather events during late 2010 and early 2011, which caused signifi cant declines in iron ore and coal exports in Queensland. The ongoing recovery in the resources sector from these extreme weather events is refl ected in the RBA s revised forecast, as is an expectation of slower than forecast growth in domestic markets not associated with the resources sector. About the Timber Market Survey The quarterly Timber Market Survey (TMS) report presents quantitative and qualitative information on timber price movements and market trends in Australia. It contains national price indexes for a range of timber products, as well as an update on economic conditions that infl uence wood product markets and the latest trade data. Price data presented in the report are collected through quarterly surveys of a representative sample of timber market participants in eastern Australia. All TMS reports contain pricing information for softwood timber, panel and engineered wood products. In addition, the June and December quarter reports contain pricing information for hardwood timber products. Although growth forecasts over 2011 have been revised, the RBA has left forecasts for 2012 and 2013 mostly unchanged. This relates to the strong medium term outlook for the resources sector and the increasing demand from Australia s major trading partners in Asia. However, the RBA suggests other parts of the economy not related to the resource sector are diverging, which is characterised by cautious consumer spending, diminished fi scal stimulus and industries affected by the high Australian dollar. The high Australian dollar (AUD) is continuing to have a signifi cant infl uence on sectors such as manufacturing, tourism and tertiary education. Over the June quarter 2011, the AUD averaged US$1.08, a sharp increase from an average of US$1.01 over the March quarter. With the AUD experiencing a recent decline to around US$1.01 to US$1.03 amid the global fi nancial uncertainty in August this year, Westpac Economics 3 are forecasting the AUD to stay at around US$1.01 through the December quarter The most recent Performance of Manufacturing Index (PMI) for the month of July 2011 reported an overall decline in manufacturing activity of around 18%, which represents the lowest PMI result since July A decline in manufacturing was reported across all Australian states, which included a signifi cant contraction in the wood products and furniture sub-sector. The PMI identifi ed competition from cheaper imports, a weaker housing market and lower consumer confi dence as being major drivers of the July result. 1 RBA, Statement on Monetary Policy, August ABS, Australian National accounts (5206.0) March Westpac Economics, Australia & NZ weekly, 15 August PWC/AIG, Performance of Manufacturing Index, July

2 Economic & construction update continued Recent results of the Westpac-Melbourne Institute Index of Consumer Sentiment (CSI) revealed a softening in consumer confi dence, with falls of 8.3% and 3.5% over the months of July and August Other data collected as part of the CSI suggests the recent volatility experienced in global fi nancial markets is contributing to a weaker outlook for economic conditions over the next 12 months. The NAB business survey results showed business conditions remaining steady over the June quarter However, an overall loss of business confi dence was recorded over the June quarter, particularly in Queensland, New South Wales and Victoria. Business confi dence was reported as being highest in Western Australia. The Australian Bureau of Statistics (ABS) reported the Consumer Price Index (CPI) at 3.6% over the year to the June quarter 2011, an increase from 2.7% over the year to December The RBA indicates this increase is a short term fl uctuation derived from extreme weather events, most notably Cyclone Yasi, which caused sharp increases in the prices of fruit and vegetables. Measures of underlying infl ation reached 2.75% over the year to the June quarter, and a further increase to around 3.25% is forecast over the year to December A factor affecting the medium term outlook for infl ationary measures, and also the outlook for consumer sentiment, is the implementation of the federal government s carbon price from July Federal treasury modelling indicates the carbon price will cause a one-off increase in the CPI of 0.7% over 2012/13 7. This increase is mostly derived from higher household electricity, gas and food prices. The RBA Board left the offi cial cash rate (OCR) unchanged at 4.75% at its July and August Board meetings, extending the break in tightening of monetary policy to nine months. The requirement for further tightening of monetary policy in the future depends on the outlook for growth and infl ation. The RBA has indicated that infl ation could ease below 3% by early 2012 if fruit and vegetable prices normalise and household demand is subdued. However, the recent increase in the medium term outlook for underlying infl ation could bolster the case for increasing the OCR. In a turnaround of expectations from earlier reports, some analysts are predicting that the RBA will lower the OCR by the end of the year given the uncertain outlook for domestic economic conditions. Australian Housing Market Table 1 shows the latest activity across leading ABS dwelling construction market indicators up to the June quarter New dwelling construction approvals fell by 3.49% over the June quarter , indicating a possible decline in future dwelling commencements. The value of residential alterations and additions increased by 3.14% 9 and the total value of dwelling fi nance commitments increased by 4.97% over the June quarter. However, despite this quarterly increase in fi nance commitments, the year ending value decreased from $18.8 billion to $15.5 billion 10, a decrease of around 17.6%, which indicates a possible weaker outlook for housing starts in the near future. Table 1: Summary of leading dwelling construction indicators, June 2011 Figure 1 shows the historic impact of the OCR on national dwelling approvals. In June 2011, national dwelling approvals fell to 12,411 units, the lowest monthly total in two years, which refl ects the infl uence of tightening monetary policy during late 2009 and Over the 12 months to June 2011, seasonally adjusted dwelling approvals have fallen at a rate of 2.22% per quarter. With dwelling approvals falling and fi nance approvals increasing over the June quarter 2011, there is uncertainty among analysts whether housing construction activity will continue to slow down or hold steady leading into the September quarter. Figure 1: Monthly historic movement in national dwelling approval '000 approvals Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Dw elling approvals (3 monthly moving average) RBA Official Cash Rate Source: Australian Bureau of Statistics, Reserve Bank of Australia NB: The above data are seasonally adjusted New dwelling construction approvals fell by 3.49% over the June quarter 2011, indicating a possible decline in future dwelling commencements cash rate (%) Source: Australian Bureau of Statistics NB: The data are the seasonally adjusted value of approvals for the public and private sectors. 5 Westpac-Melbourne Institute, Survey of Consumer Sentiment, August NAB, Quarterly Business Survey, June Quarter Australian Government, The Treasury Carbon price modelling, July ABS, Building Approvals, June ABS, Building Activity , June ABS, Housing Finance, , June

3 Economic & construction update continued Figure 2 shows the breakdown of dwelling approvals by state. In June 2011, Queensland and South Australia experienced the most signifi cant falls in dwelling approvals, declining 18.5% and 12.2% respectively, while Victoria and New South Wales recorded increases of 6.9% and 3.2%, respectively. Over the year to June 2011, building approvals in most states fell, particularly in Queensland where approvals declined by 21.7%. The exception to this was Victoria, which had a 5.8% increase in building approvals. Figure 3: Quarterly value of residential building activity by construction type Figure 2: Monthly dwelling approvals by state Jun-00 Mar-01 Dec-01 Sep-02 Jun-03 billion $AU Mar-04 Dec-04 Sep-05 Jun-06 Mar-07 Dec-07 Sep-08 Jun-09 Mar-10 Dec-10 Source: Australian Bureau of Statistics NB: The above data are seasonally adjusted New residential building Total residential building Residential alterations and additions Source: Australian Bureau of Statistics NB: The above fi gures are seasonally adjusted This general downturn in housing activity can be partly attributed to weak private sector investment in residential construction in the period following the unwinding of government stimulus programs introduced under the Federal government s $42 billion Nation Building economic stimulus plan 11. Funding of $5.2 billion was allocated to the social housing initiative, which aimed to repair existing public dwellings and construct over 19,000 new homes. As of the end of March 2011, over 95% of social housing projects had started and 68% had been completed. Other stimulus programs, not related to housing, are also winding up. The $16.2 billion Building the Education Revolution (BER) program that focussed on improving school infrastructure was reportedly 90% complete at March Figure 3 breaks down the value of new residential building activity over time into its components of new residential building and alterations and additions 12. The value of alterations and additions 13 a market indicator for appearance and landscaping timber products has steadily increased in nominal terms by 1.25% per annum over the last 10 years. After taking into account infl ation this value is likely to have steadily decreased over the period. The value of the more volatile market for new residential building declined by 4.8% over the June quarter, meaning the share of alterations and additions increased to around 15.0% of total residential building activity. Although the total value of residential building activity fell to $11.1 billion in June, which is the lowest monthly total since September 2009, this was still above the average value over the last decade in nominal terms. Figure 4 breaks down the value of fi nance approvals for dwelling construction by state. After declining in the March quarter 2011, the value of fi nance approvals for new dwelling construction over the June quarter increased across all states, with Victoria recording the largest increase of 26.4%. These results slightly improve the short term outlook for dwelling approval results, although the results over the two years to June 2011 show a general decreasing trend across all states. Figure 4: Quarterly value of fi nance approvals for dwelling construction by state 14 $ million 1,800 1,600 1,400 1,200 1, Jun-00 Mar-01 Dec-01 Sep-02 Jun-03 Mar-04 Source: Australian Bureau of Statistics NB: The above data are unadjusted original data Dec-04 Sep-05 NSW Victoria Queensland South Australia Western Australia Tasmania Jun-06 Mar-07 Dec-07 Sep-08 Jun-09 Mar-10 Dec Australian Government Nation Building Economic Stimulus Plan 12 ABS, Building Activity , March The data collected for alterations and additions approvals is limited to relatively large scale renovations projects subject to local council regulations and with a value over $10, ABS, Housing Finance , June

4 Imports and exports Figure 5 shows the latest available data on the volume of Australian imports and exports of softwood timber products. Imports of softwood sawn timber fell to around 146,000 cubic metres over the June quarter 2011, a decrease of around 9% from the March quarter 2011 and the lowest quarterly volume since the March quarter A fourth consecutive quarter of declines in imported softwood sawn timber, despite a historically strong AUD relative to the USD, indicates a slow down in trading conditions. This is consistent with recent trends in the Australian housing market across many states. However, despite the latest quarterly declines, imports of softwood sawn timber were around 11% higher over the year to the June quarter 2011 when compared to the year to June The import volume over the year to June 2011 was around 631,000 cubic metres, the highest fi nancial year total since 2004/05. The June 2011 volume of exported softwood sawn timber will be released by ABARES in time for the September quarter TMS report. Figure 6 shows imports of plywood and veneer remaining relatively stable over the June quarter 2011, with an increase of around 2% over that period. Over the March and June quarters, New Zealand and Chile have been the largest sources of plywood and veneer imports, accounting for over 40% of imports. Meanwhile, China s share of Australian imports of plywood and veneer reached around 14% in the year to June Australian imports of plywood and veneer from China have grown rapidly over the last decade, at a rate of around 43% per annum. Figure 5: Quarterly softwood timber imports and exports Figure 6: Quarterly plywood and veneer imports and exports Source: Global Trade Atlas, RBA, ABARES Shipping prices have remained at relatively low levels since dropping by over 90% on average over six months in 2008 during the global fi nancial crisis. From June to July 2011, shipping rates recorded through the Baltic Dry Index decreased by approximately 4%, which equates to around 28% lower than in the month of July Recent reports 15 indicate a growing overcapacity of freight ships globally, which continues to place downward pressure on rates. Figure 7 breaks down quarterly softwood timber imports by source with an overlay of relevant exchange rates. The composition of source countries for softwood timber imports has changed over the last decade. Despite the recent strength of the AUD against the New Zealand dollar, New Zealand s share of imports has reduced from pre-global fi nancial crisis levels of over 50% to a more recent average of lower than 40%. Over the 12 months to June 2011, New Zealand s share of Australian imports was 33%, while European countries accounted for around 48% of imported volume. Figure 7: Quarterly softwood timber imports by source Source: Global Trade Atlas, RBA, ABARES Australian imports of plywood and veneer from China have grown rapidly over the last decade Source: Global Trade Atlas, RBA 15 Hawkins Wright, 2011, Baltic Dry Index data 4

5 Imports and exports continued Figure 8 breaks down Australian imports of softwood sawn timber by major European source country. Over the decade to June 2011, growth of the volume of imported softwood sawn timber from European countries has averaged around 19% per annum. The Czech Republic has remained one of the major European sources of Australian imports over this period. A number of other European countries have emerged as major sources, including Estonia, Austria, Germany, Sweden and Lithuania. Key factors driving the increase in volume of European timber imports include the strong Australian dollar, weaker economic conditions in Europe and demand from a relatively strong construction sector in Australia. Figure 9: Quarterly hardwood timber imports and exports Figure 8: Annual softwood timber imports from European countries Source: Global Trade Atlas, RBA, ABARES Figure 10: Quarterly hardwood timber imports by source country Source: Global Trade Atlas Figure 9 displays the latest available information on Australian hardwood sawn timber imports and exports. Imports of hardwood sawn timber reached around 22,000 cubic metres in the June quarter 2011, an increase of around 5.0% from the March quarter. This increase was derived from higher volumes from Papua New Guinea, the United States and the Solomon Islands. After the decline in the volume of imported hardwood sawn timber during weaker economic conditions in 2008 and early 2009, volumes did not recover to the same extent that softwood sawn timber imports have. Figure 10 illustrates the breakdown of Australian imports of hardwood sawn timber by source country. Indonesia and Malaysia continue to be the major sources of hardwood timber for Australian importers, comprising around 34% and 33%, respectively, of the total volume of imports in the June quarter. Even though recent total import volumes are well below the levels experienced in 2004 and 2005, the composition of source countries has not changed signifi cantly. Source: Global Trade Atlas Over the decade to June 2011, growth of the volume of imported softwood sawn timber from European countries has averaged around 19% per annum. 15 Hawkins Wright, 2011, Baltic Dry Index data 5

6 Softwood price changes June quarter 2011 The latest price trends for the major structural softwood timber products are shown in Table 2. Over the June quarter 2011, as with building approvals, prices for all of the major structural softwood timber products fell. Similarly to the March quarter, MGP12 products appeared to sustain larger price declines than MGP10 products. MGP12 90 x 35 products experienced the largest decline across the June quarter, falling by 3.86%, which contributed to a 12 month decline of 4.26%. These weighted average results were mostly weighed down by fi gures from Queensland and New South Wales, where widespread declines were experienced for softwood structural products. Results from Victoria were mixed, with some prices for MGP10 products increasing slightly, however prices for MGP12 products either held steady, or decreased. Queensland experienced the largest price falls in softwood structural timber over the year to June Comments from TMS survey participants suggest a range of factors have infl uenced this result in Queensland. Downward price drivers were reported to include weak demand for housing, the unwinding of government economic stimulus and delayed recovery work after the extreme weather events (cyclones and fl ooding) of late 2010 and early Sentiments of TMS participants in NSW and Victoria also mentioned some weaker market conditions for softwood structural products. Table 4: Panel products nominal price changes to June quarter 2011 Table 5 shows this quarter s price movements for engineered wood products. Prices slightly decreased across all surveyed I-joist and LVL products over the June quarter. Over the 12 months to June, prices for I-joist products have increased by around 4%, while LVL price movements have shown very little change. Table 5: Engineered wood products nominal price changes to June quarter 2011 Table 2: Structural softwood timber nominal price changes to June quarter 2011 Table 3 shows the latest price movements in outdoor softwood timber products. Aside from treated pine decking, which underwent a price decline of 0.63%, prices for treated sleepers and fencing timber increased over the June quarter All products experienced increases over the year to June 2011, potentially refl ecting stable demand for landscaping and renovation products amid a slowing house building sector. Table 3: Outdoor softwood timber - nominal price changes to June quarter 2011 Similarly to the March quarter, MGP12 products appeared to sustain larger price declines than MGP10 products Table 4 shows price movements for plywood, particleboard and MDF panel products. Plywood C/D grade 2400 x 1200 x 12 mm experienced an increase of 0.98% over the June quarter, bringing to an end three consecutive quarters of price decline. Even so, the net effect over the previous 12 months resulted in an overall 8.5% decline for the year. Particleboard tongue and groove products showed relatively strong increases over the June quarter. These particleboard products have experienced marginal increases since March Both of the surveyed MDF products experienced small increases over the June quarter. 6

7 Long term softwood price indexes The historic nominal price trend in key TMS softwood products is shown in Figure 11. The MGP10, MGP12 and treated F7 indexes presented in Figure 11 are calculated using product weightings of 40% for 70 x 35 mm and 60% for 90 x 35 mm. This quarter s results strengthened the diverging trends between price movements for outdoor products versus structural building products. Price indexes for the structural products MGP10, MGP12 and treated F7 have declined over the last three quarters. The MGP12 index has experienced the largest fall over this period, with prices falling to their lowest levels since December 2007 albeit still high by comparison with prices over the period. Meanwhile, price indexes for softwood outdoor products have remained relatively strong. Treated decking decreased marginally over the last two quarters after reaching a peak in December 2010 and treated sleepers has continued a general upward trend that begun in June Figure 12 shows historic price movements for wood based panels. Plywood C/D grade prices recorded a slight increase after a general trend of decline since the March quarter Nominal prices for tongue and grove particleboard and MDF products continued a long term upwards trend that withstood the global fi nancial crisis period over 2008 and Figure 12: Quarterly nominal price index 17 of key wood based panel products Figure 11: Quarterly nominal price index 16 of key softwood timber products The historic price trend of selected engineered wood products is shown in Figure 13. Results have shown a divergence in prices for I-joist and LVL products over the last two years. Over the June quarter this divergence remained mostly unchanged with both indexes falling marginally. The falling LVL price index currently stands in contrast to the volume of Australian LVL imports which are currently high by historical standards. Figure 13: Quarterly nominal price index 17 of key wood based panel products This quarter s results strengthened the diverging trends between price movements for outdoor products versus structural building products. 16 The reported price changes are based on weighted average price changes across New South Wales, Victoria and Queensland using weightings of 50%, 25% and 25% respectively to represent the approximate size of softwood markets in each state. 17 The reported price changes are based on weighted average price changes across New South Wales, Victoria and Queensland using weightings of 50%, 25% and 25% respectively to represent the approximate size of softwood markets in each state. The indexes are calculated using a simple average of the two product dimensions. 7

8 Hardwood price changes six months to June 2011 Table 6 presents price movements, in nominal terms, for a selection of structural hardwood timber products for the six month period to June Results showed kiln dried structural products F17 and F27 increasing by around 1.2% and 2.4%, respectively, over the six months to June This continues an increasing trend over the year to June 2011 for these products. Price movements in Victoria varied across the F17 dimensions surveyed by the TMS. The smaller dimensions of 90 x 35 mm and 90 x 45 mm showed slight price increases of around 1.0% over the six months to June Meanwhile, the price movement for the larger F17 dimension of 120 x 35 mm showed a decline of around 2.3% and the price for 190 x 45 mm remained relatively stable. Other green hardwood timber products had mixed results over the last reporting period at the state level. Results for F8 in Victoria showed an increase of around 1.5% over the six months to June 2011, while F14 in Queensland showed a marginal increase of around 0.6% and F11 in New South Wales fell by around 2.0%. Price movements in Victoria varied across the F17 dimensions surveyed by the TMS. Table 6: Structural hardwood timber products nominal price changes to June Price movements for hardwood fl ooring and joinery appearance grade products are presented in Table 7. Over the six months to June 2011, all products recorded positive price movements ranging from around 0.3% for Vic Ash select grade fl ooring to around 3.7% for Blackbutt standard grade fl ooring. Results for Vic Ash joinery products showed marginal price increases for both dimensions of select grade. Some comments from survey participants mentioned the relative robustness of the home renovation market. Overall, however, sentiments were mixed about sales results and some survey participants were concerned about the current level of consumer confi dence. Table 7: Hardwood appearance products nominal price changes to June Unless stated otherwise, the hardwood price changes reported in Tables 6-7 are based on weighted average price changes across New South Wales, Victoria and Queensland using weightings of 40%, 35% and 25% respectively to represent the approximate size of hardwood markets in each state. 8

9 Long term hardwood price indexes Figure 14 shows the long term nominal price trend for the F17 and F27 kiln-dried hardwood structural products. Hardwood structural timber products surveyed by the TMS have generally followed an increasing trend since Over the fi ve years to June 2011, the F17 index has increased at an average rate of around 3.3% per annum and F27 has increased at a rate of around 4.7% per annum. Since 2008, price trends for F17 and F27 have diverged to some extent with F17 prices increasing at a relatively slower pace than F27. Figure 15: Historic six monthly nominal price index of select grade fl ooring products New South Wales market Figure 14: Historic six monthly nominal price index 19 of selected hardwood structural products Figure 16: Historic six monthly nominal price index of select and standard grade fl ooring products Victorian market Figure 15 shows the long term nominal price trend of major select grade fl ooring products purchased by timber wholesalers and other merchants in New South Wales. New South Wales Spotted Gum prices have shown a steady increase of around 5.1% per annum since June Recent results for Sydney Blue Gum and Blackbutt showed slight recoveries after experiencing declines through the six months to December Figure 16 shows the historic nominal price trend for Victorian Ash and Tasmanian Oak fl ooring products in the Victorian market. Results since June 2009 show select and standard grade prices following a general upward price trend, which is more pronounced in Tasmanian Oak select grade. Upward price trends may refl ect stable demand for these products in Victoria. Over the fi ve years to June 2011, the F17 index has increased at an average rate of around 3.3% per annum and F27 has increased at a rate of around 4.7% per annum. 19 The reported price changes are based on weighted average price changes across New South Wales, Victoria and Queensland surveys using weightings of 40%, 35% and 25% respectively to represent the approximate size of hardwood markets in each state. 9

10 References ABARES (2011) Australian Forest and Wood Products Statistics September & December quarters Published by the Australian Bureau of Agricultural and Resource Economics and Sciences, Canberra. ABS (2011) Dwelling Unit Commencements, Preliminary, March Quarterly series published by the Australian Bureau of Statistics, Canberra. ABS (2011) Housing Finance, Australia, June Monthly series published by the Australian Bureau of Statistics, Canberra. ABS (2011) Building Approvals, Australia, June Monthly series published by the Australian Bureau of Statistics, Canberra. ABS (2011) Building Activity, Australia. June Monthly series published by the Australian Bureau of Statistics, Canberra. Australian Government The Treasury (2011) Strong growth, low pollution Modelling a Carbon Price. Report produced by the Treasury. Available at GTIS (2011) Global Trade Atlas. Online database provided by Global Trade Information Service. Available at: Hawkins Wright (2011) PulpWatch. Online publication and database provided by Hawkins Wright, London NAB (2011) Quarterly business survey. Monthly and quarterly series published by National Australia Bank. PWC/AIG (2011) Performance of Manufacturing Index, July Monthly report produced by PWC. RBA (2011) Statement on Monetary Policy, August Published by the Reserve Bank of Australia, Sydney. Westpac Economics (2011) Australian & New Zealand weekly. Weekly report produced by Westpac Economics. Westpac Economics (2011) Westpac Market Insights Australia, G3 and New Zealand, August Monthly report produced by Westpac Economics. Westpac-Melbourne Institute (2011) Index of consumer sentiment. Available at: Next Quarter... The September quarter 2011 TMS report will be available around the end of November It will include the latest quarterly price change data for softwood timber products. The Timber Market Survey is prepared by URS. As one of the largest and longest established forest sector consultancies in Australia, New Zealand and Asia, URS has an extensive understanding of the forest sector in our region. URS provides professional services to the forest sector for all components of the forest product chain including forest management and technical forestry skills, due diligence, economics, policy, community and regional development, business management and market intelligence. For more information about the Timber Market Survey or URS please contact: Blair Freeman Duncan MacLeod Principal Consultant Senior Consultant blair_freeman@urscorp.com duncan_macleod@urscorp.com Funding provided by: ForestryPlantationsQueensland Pty Ltd The Timber Market Survey (TMS) was prepared with funding from Forest and Wood Products Australia, Forests NSW, Timber Queensland, VicForests, HVP Plantations, Forestry Plantations Queensland, the Department of Environment and Resource Management Queensland, Forestry Tasmania, ForestrySA and the Forest Products Commission Western Australia ( the funding bodies ). URS Australia Pty Ltd (URS) 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 1 March The methodology adopted and sources of information used by URS are outlined in this report. URS has made no independent verifi cation of this information beyond the agreed scope of works and URS assumes no responsibility for any inaccuracies or omissions. No indications were found during our investigations that information contained in this report as provided to URS was false. This report was prepared between 1 July 2011 and 26 August 2011 and is based on the conditions encountered and information reviewed at the time of preparation. URS 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. 10