Comments from 10/7/2022
Sellers in the Northern region state that activity for grade lumber remains challenging. US hardwood lumber distributors have been inundated with imported products that have clogged warehouses. Downstream lumber sales are decent, but distributors do not have room to store extra material. Too, with kiln dried lumber prices retreating, there is no incentive for buyers to purchase beyond immediate needs. Inventories have been pushed to vendors, creating storage and cash flow issues for concentration yards and sawmills selling directly to end users. The nearly 14% increase in sawmill production this year over last year is adding to on hand supplies. The good news is that there is pent up demand for US produced hardwood lumber. As the front page shows, the housing supply pipeline is at a record high. Eventually those homes will be completed and need cabinets, moulding, millwork, flooring, furniture, and other interior fittings. In addition, remodeling activity is strong. Most remodelers indicate they are booked out through, at least, the first of 2023. Many, if not most, customers that remodel homes are cash customers, meaning they are less likely to be impacted by rising mortgage rates. However, US hardwood suppliers are reliant on international business as well as domestic demand, and global sales are slow. Exports to Southeast Asia and Europe are weak, while sales to Canada and Mexico are fair.
ASH: Secondary manufacturers and concentration yards have been able to add to on hand Ash supplies the past summer and now into fall. Currently, buyers have adequate supplies of most grades and thicknesses and are purchasing cautiously. Reported prices for green 4/4 through 8/4 #1C are off $15, while all other listings stand. The gains in green output have provided customers with sufficient volumes of kiln dried stocks, too. Inventories have increased at the producer and end user level. Transactions point out sufficiently lower numbers to decrease the 4/4 Fas and #2A listings and noted range figures.
ASPEN: Markets for Aspen remain good, though interest in this species as a low cost substitute for other species has waned slightly. At the same time, production has edged up, and supplies are meeting or exceeding demand. No changes are warranted to the green listings at this time, but the kiln dried 4/4 #1C figures are lowered.
BASSWOOD: For some sawmill operators, Basswood is regularly included in the production rotation. For other producers, Basswood takes a backseat to higher valued whitewoods. Yet, production of this species has increased, especially for the 4/4 thickness. Information reduces the 4/4 #1C&Btr listings $20 for Fas&Sel and $10 for #1C. Markets for kiln dried Basswood have cooled from the high rate of demand experienced earlier this year, and inventories are rising. After last week’s broad price adjustments, only the 4/4 #1C figures and both ends of the 5/4 Fas ranges decline in this week’s issue.
BIRCH: Sawmill operators are processing steady volumes of green Birch, and end users are readily accepting developing supplies. Reported prices for #3A&Btr are steady and hold the listings in check. Markets for kiln dried #1C&Btr are holding up well in the Upper Midwest. But, reports indicate activity in the Northeast has softened. Prices in that region are slipping, while prices for #1C&Btr in the Upper Midwest are relatively stable. No changes are warranted to the kiln dried #1C&Btr figures in this week’s issue, but the 4/4 #2A listings and ranges fall.
HARD MAPLE: Over the years, logging contractors and sawmill operators have become adept at handling Hard Maple during warm weather months without significant stain damage. And, the fact that demand for this species was strong last year and into the first part of 2022 provided suppliers with incentive to build log decks. However, markets rapidly changed, and concentration yards and secondary manufacturers moved from an inventory build mode to maintenance purchasing. Timing green shipments with customers’ needs has become problematic. Price incentives are necessary to keep lumber shipped. Information shows additional price reductions this week, with 4/4 through 8/4 Fas&Sel falling $90 and #1C $80 for both color classifications. In addition, the #1&2 White 4/4 #2A listing drops $40. High green production for an extended period of time and a downturn in shipments have caused kiln dried inventories to balloon. Competition for orders is intense and is driving pricing lower. All of the kiln dried #1&2 White figures are decreased with the exception of 8/4 #1C, and the Unselected 4/4 and 5/4 #1C&Btr listings and ranges decline.
SOFT MAPLE: The front page graph shows that there is a record high volume of new homes under construction that could lead to future demand for hardwood finished goods. But, until those homes are completed, markets for Soft Maple are only purchasing for immediate needs. There is too much green lumber available for the current rate of demand. Reported prices for green 4/4 through 8/4 Sap&Btr and Unselected are falling, with $50 decreases to Fas&Sel, $40 to #1C, and $30 to #2A. Similarly, kiln dried inventories have increased above the market’s needs, resulting in broad price decreases. Information lowers the Sap&Btr 4/4 through 8/4 #1C&Btr figures and the Unselected 4/4 #1C&Btr listings and bottom sides of the ranges.
RED OAK: Drying times speed up during warm weather months, as has been the case this year, and Red Oak inventories have increased. At the same time, demand for this species softened. Domestic business is fair, but exports to Southeast Asia are limited. Kiln dried Red Oak prices are down, warranting decreases to the 4/4 #1C&Btr and 5/4 #1C and #2A listings and ranges. Meanwhile, green production has edged up the past few weeks, and supplies are outpacing buyers’ needs. Information decreases the 4/4 through 8/4 #1C&Btr listings $40 for Fas&Sel and $25 for #1C.
WHITE OAK: Export business for White Oak is soft. European customers are contending with weaker sales of finished goods and possible production restrictions this winter. Southeast Asian markets have not rebounded from falling consumer demand domestically and internationally. North American demand is decent, though most end users have adequate on hand inventories. Information shows kiln dried prices are significantly lower, warranting sharp decreases to the 4/4 #2A&Btr listings and ranges. Softer markets for kiln dried stocks are impacting green White Oak business. Concentration yards and secondary manufacturers are more selective with order placements. All published thicknesses of #3A&Btr retreat, with Fas&Sel off $80, #1C $40, and #2A and #3A $20.
PALLET LUMBER, CANTS, TIES, & BOARD ROAD: The most recent report on US durable goods (August) shows new orders slipped for the second consecutive month. However, shipments maintained solid growth, registering a 0.7% increase for the month. Most wooden pallet and container manufacturers are busy, but raw material inventories have increased over time. Reported prices for cants are mostly steady, while pallet lumber sales are a bit slower. Information holds the cant, random width lumber, and selected width lumber figures in check.
The Railway Tie Association’s annual meeting concluded this week, with an optimistic outlook for business in 2023. Treaters are purchasing steady volumes of 7×9 crossties, and reported prices are in line with last week.
Board road markets are reportedly slow for most companies. However, demand for mat timbers has improved in some areas. Suppliers are easily satisfying buyers’ needs for both items. Reported prices for board road are stable and hold the listing and range in check.