Mission Statement:
HMR provides the wood products industry with unbiased, consistent, and timely reports of market prices, commentary, and industry data on North American hardwood products and imported species.
Introduction
HMR began reporting prices on hardwood products in 1922. In 2023, HMR was acquired by Fastmarkets, which began reporting prices on agricultural products, minerals, and metals in the 1800s. Prior to acquiring HMR, Fastmarkets acquired forest products data providers RISI and Random Lengths.
Together, HMR, Random Lenths, and other Fastmarkets price reporting entities make up the world’s largest price reporting agency (PRA) dedicated to forest products, providing market intelligence for the pulp and paper, nonwovens, biomass, softwood, panel stock, hardwood, and tropical products. Our offices are in Boston, Atlanta, San Franciso, Eugene, Memphis, Helsinki, Singapore, and Sao Paulo.
HMR’s reporters are required to abide by a code of conduct and clear pricing procedures during market reporting and pricing activities. HMR is completely independent and has no vested commercial interest in any of the markets it prices.
The aim of this document is to provide a clear overview of HMR’s methodology and specifications for the prices it assesses.
If you have any questions, please contact the senior vice president of editorial and pricing for Fastmarkets Forest Products, Matt Graves, at matt.graves@fastmarkets.com.
Price discovery and methodology
Methodology rationale
HMR produces independent, fair, and representative price assessments and indices of Eastern U.S. hardwood lumber on a weekly basis, with tropical imports and hardwood lumber import products reported monthly.
HMR’s rationale is to adopt and develop the price discovery process and methodology described in this guide to produce assessments that are consistent and representative indicators of value of the market to which they relate for the trading period they cover.
During the price discovery process, the price reporter’s goal is to discover at what representative level market participants have concluded business, made offers, or received bids over a certain defined trading period. A price reported by HMR is a benchmark, or indicator, of the trading level of an item at the time of publication. Prices reported are judgments of market prices based on most current information received. Each price shown falls within the range of prices reported by those sources contacted. A reported price is not an average of the prices reported to the HMR staff. It is not the price for the item for the week following publication (that is, it is not a projected price for future transactions). It is not the only price at which transactions took place during the week of publication.
Data collection criteria
HMR’s reporters seek documented transactions (invoices, purchase orders, and sales acknowledgements) from regular contributors from each side of a business transaction, including primary producers, secondary manufacturers, brokers, and lumber distributors. Surveys of market participants, both through email and telephone calls, are another means by which market intelligence is gathered. HMR editors also regularly attend regional and national meetings to build relationships with sources throughout the wood products industry to collect and ascertain market intelligence.
Editors on the staff contact sources who are directly involved in selling or buying of products. The number of sources contacted varies, depending on the product. Many sources are contacted each week; some are contacted less frequently, such as every two or three weeks, and some are contacted on an irregular basis.
The staff also uses phone interviews as a method of gathering information. Our valued sources provide information week-in and week-out through the ups and downs of the market. This provides HMR with current information on which to base commentary. In addition, consistent contact with our sources leads to consistency in the prices reported. And only through phone interviews can we ask probing questions for which answers provide us with a greater understanding of the markets and market activity.
Price specifications and reference units
HMR has clear specifications for all the price points that it covers. All the reference units, such as currency and volume, are in line with the trading conventions in recognised lumber markets.
HMR specifications detail the material’s dimensions, species, grade, location, and payment terms. All reported items conform to National Hardwood Lumber Association grading standards and/or general industry practices. Documented transactions provide these details, and surveys are designed to ascertain the same level of information. These specifications are determined in consultation with market participants and follow industry convention. Reporters ensure that the information they receive matches these specifications.
Prices reported in HMR’s publications represent transactions between primary manufacturers and processors and their customers. Most are reported on an “f.o.b. mill” basis, but some prices are provided on a “delivered” basis. In such cases, freight costs are deducted in order to report all prices as “f.o.b. mill”.
Hardwood Market Report and HMR Import Newsletter prices are historical records. HMR does not predict or anticipate future prices or trends. As a result, reported prices lag the market to an extent determined by how rapidly prices are moving up or down and how quickly sources provide data.
Hardwood Market Report and HMR Import footnotes are important for readers to fully understand reported prices. These footnotes provide detail and context for the prices that are reported.
Guidelines on the use of judgment by price reporters during the assessment process
HMR focuses on prices of actual purchases direct from suppliers. In contact with producers, the focus is on prices of actual, completed open-market sales. To produce the price assessment, greater weighting is generally given to actual concluded transaction data. Survey responses are second in order of importance, followed by data sources’ own assessment of the market when they have no transactions to report. But other considerations may also be contemplated, such as the trustworthiness of a data source based on past data submissions or their willingness to provide data on a consistent basis. Relationship between certain items may also be considered in the absence of solid buy/sell information.
The staff is aware of and considers volumes sold, quality, tallies, mill location, shipping times, transportation modes, and other factors that affect prices and the markets. Confidential phone interviews are important to our understanding and tracking of the many variables. Our awareness of them allows us to report prices and market conditions as consistently as possible.
Since commodity markets differ in liquidity levels at different periods, the methodology does not set any minimum number, or threshold, of transactions to be gathered on which to base the assessment.
Data verification
HMR takes steps deemed appropriate to ensure the accuracy and completeness of the information it obtains. Those steps can include investigation of the information by our editorial staff and dropping sources whose information has proved untrustworthy. HMR does not compensate its sources to induce them to provide information to us. Nor does HMR accept remuneration from sources to include their information in the data on which we base our reports. No source is required to give us information, nor are we required to obtain information from any specific source. The identities of our sources and all the information they provide to us are kept strictly confidential. HMR will not and does not act as a conduit for price information between individual producers and customers.
Criteria for excluding data
HMR’s editors and price reporters will use their expert judgment to exclude outlying or unrepresentative numbers, and discount or discard prices that it believes may otherwise be questionable and unreliable.
Our focus is on actual open-market transactions between producers and their customers during the week of publication.
Weighting of data
Each transaction is factored into price discovery for specific items. The volume sold during the current reporting period is considered when determining if price changes are warranted.
For example, if company ABC sells 10,000 board feet (BF) of 4/4 Fas Red Oak at $1,000/ MBF and company XYZ sells 100,000 BF at $1,050/MBF, more weight is put on the larger volume sale. However, other factors can influence editors’ decisions on volumes. If the larger-volume sale was a one-off distressed sale, less emphasis will be placed on that transaction than if the sale was ongoing business with a regular customer.
Fall-back Procedures
Since commodity markets differ in liquidity levels at different periods, the methodology does not set any minimum number, or threshold, of transactions to be gathered on which to base the assessment. In each pricing session, reporters aim to source data from a suitably diverse set of market participants.
In the unlikely event we cannot conduct our price surveys in the usual manner, or that we are unable to gather sufficient price points to assess the market in the usual way, we reserve the right to roll forward prices from the latest pricing session.
Methodology and review and consultation process
HMR’s editorial teams carry out a formal review and approval of its methodologies on an annual basis. The process starts with an open consultation in which feedback is invited from users. Further consultation follows should any material change to the methodology be proposed. Material changes are those that, once implemented, may result in fundamental changes to the published price.
At the end of the consultation process, the editorial teams review any feedback received and decide on whether a change should be made before announcing and explaining that decision to the market via a Pricing Notice. The editorial teams may also suggest changes or additions to methodologies on an ad-hoc basis to reflect market developments, in which case they will follow the same process as outlined for formal reviews.
Price Correction policy
Publication of price errors can occasionally happen for reasons that may include technical, input errors, or incorrect application of the methodology.
To minimize the inconvenience to our subscribers, HMR aims to investigate each error as soon as it becomes aware of it and to publish a correction promptly. If the correction is substantial, a Pricing Notice will be published on the HMR website.
HMR will publish a correction of a price only where it has established undeniably that there has been an error. HMR price assessments are produced based on the best data available at the time of the assessment. It will not retroactively change a price based on new information or additional submission of data received after a respective pricing session has closed.
Queries and complaints
HMR encourages engagement from the market on its pricing principles and methodology. The company promotes understanding of its pricing procedures and is committed to responding to requests for further information and clarification on a timely basis.
There are multiple channels for interaction with the pricing team including email and telephone. If a user has an issue with the published prices, then they may contact the pricing team. In the event that the response is not satisfactory, the issue may be escalated to the internal compliance department.
HMR takes all queries and complaints seriously and will seek to provide an explanation of the prices wherever possible. It is important to note, however, that input data remain confidential and cannot be provided to third parties.
HMR Composite Prices and Indices
HMR compiles 9 product or species-specific composite prices and indices: the Southern region composite prices; Appalachian region composite prices; Northern region composite prices; Industrial product composite prices including all regions; composite prices for all regions; railroad crosstie price index for the Southern, Appalachian, and Northern regions; crosstie price index for all regions combined.
The regional and combined composite data began on January 7, 2022.
The prices reported in Hardwood Market Report each week form the basis for the various composites. Key items in each species or product group are given weightings that roughly coincide with their share of total production and grade mix for that group. Each item’s price is multiplied by its weighting. The composite for each week is the sum of those calculations.
Since the mix of products and species represented by individual composites can change over time, the formulas used to develop the composite prices are reviewed periodically. If product and/or species mixes change significantly, the weightings of the items used in the composite are adjusted to reflect the changes.
The railroad crosstie price indices are based on weekly published prices in Hardwood Market Report. The baseline for the index is 1994 (1994=100).
