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Responsiveness of demand for structural pine to changes in timber and steel prices: A study using the FWPA softwood data series

Created 17/07/2018

Updated 09/08/2023

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Overview
This technical report estimates the responsiveness of demand for structural pine to changes in timber and steel prices. Measures of demand responsiveness can provide valuable insights into the potential implications of changes in policy or market settings on volumes and prices received by producers. The analysis focuses on estimating short-term price elasticities of demand--a formal measure of the sensitivity of demand--to changes in prices in the same quarter or recent past.

Key Issues
The estimates in this report suggest that the importance of timber and steel prices on the quantity of structural timber demanded in the short-run is limited. However, the volume of residential construction activity was found to have a substantial effect for demand of domestically produced structural pine products. In particular, new house commencements explain a great deal of the quarter-on-quarter changes in the quantity of domestic structural pine sales. This confirms the common assertion by industry that house commencements are the primary driver for structural timber demand within Australia.

Looking forward, changes in consumer preferences, socio-demographic trends and building regulations will likely play a much greater role in the choice of building materials used in housing construction compared with timber and steel prices. Trends suggest consumers are placing more weight on the environmental benefits of structural materials. Changing architectural styles will change the material requirements for a standard home. A global trend towards higher-density living will likely promote a shift toward multi-unit buildings, with recent changes to the National Construction Code opening the way for increased timber use in the midrise construction market, leading to greater timber use in multi-level buildings.

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Field Value
Title Responsiveness of demand for structural pine to changes in timber and steel prices: A study using the FWPA softwood data series
Language English
Licence Creative Commons Attribution 4.0 International
Landing Page https://data.gov.au/data/dataset/c66f475e-a64f-4b49-bd4b-4f4355eb239c
Contact Point
Australian Bureau of Agricultural and Resource Economics and Sciences
dataman@agriculture.gov.au
Reference Period 17/07/2018
Geospatial Coverage
Map data © OpenStreetMap contributors
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Data Portal Data.gov.au