The irony now is that the industrial hardwood market in the US is improving. Sounds like good news, right? I mean even country singer Frankie Ballard tells us, "bad times make the good times better." I'm afraid that might not be the case this time around. Instead, you may want to continue approaching lumber supply with caution.
2013 was a tough year for sourcing industrial-grade hardwood lumber. The US markets were faced with tight supplies, solid demand from export markets and a flourishing natural gas and oil exploration industry.
So where are we now?
- GDP in China has slowed
- Oil pricing is around $40 per barrel and is forecast to go as low as $20 per barrel
- Housing starts in the US are at their highest levels in years
- Interest rates are still low
- Unemployment figures have improved considerably
If you take weather out of the equation, the overall supply of industrial grade hardwood in the eastern US is better than it has been for quite some time. Prices are down slightly and holding. Should buyers of hardwood pallets, crates and dunnage plan for price reductions going into 2016?
Not so fast. My concern is that the underlying issues from 2013 are still in place. The US lost much of its logging and sawmilling capacity after the fall of 2008 and is not getting it back. One bit of encouraging news is that increased demand for flooring will help provide some additional industrial-grade lumber.
So what happens when China increases their GDP and oil prices go back up? I think we’re right back to 2013. What do you think lies ahead?
Post by: Rich Reiher, Vice President