Panels & Furniture Asia July/August 2020

18 | MARKET REPORT
July / August 2020, Issue 4 | Panels & Furniture Asia
US HARDWOODS
MARKET OBSERVATIONS AND
POST-PANDEMIC OUTLOOK
By: Judd Johnson Managing Editor, Hardwood Market Report
Business for US hardwoods has
contracted. After experiencing a
downturn that lasted more than
18 months due to the US-China trade
war, demand for US hardwoods suffered
further from the COVID-19 pandemic that
derailed trade worldwide.
Each of these factors, independently,
forced contraction in US hardwood
production and inventories. But,
importantly, the rapid deceleration
in business caused by the trade war
followed immediately by the COVID-19
pandemic has profound and, most likely,
lasting negative effects on US hardwood
production capabilities.
It is well understood that supply follows
demand, therefore decreases in sawmill
and lumber yard output are no surprise.
Yet, the supply decreases are not
necessarily aligned with demand for
specific species or grades of lumber.
Oddly, the estimated volume of lumber
being produced by US hardwood sawmills
is less than the total consumption, but the
availability of certain industrial products
and grade lumber items is more than
ample at present.
The best example of this circumstance
(at the time of this writing) is material
sawn for the domestic US wooden pallet
industry. Sawmills have had difficulty
selling pallet material and many have
accumulated inventory. Yet, the annual
rate of Eastern US hardwood sawmill
Chart 1
production through May dropped to
15.5 million cubic metres and production
decreased precipitously in the second
quarter.
The three-month moving average of
production (annual rate) at the end of
May was 13.6 million cubic metres; the
combined average annual rate for April
and May (available data for the second
quarter) was 12.2 million cubic metres;
and the annual rate of sawmill output for
the month of May was 10.2 million cubic
metres, which is the lowest volume for
any month in Hardwood Market Report’s
(HMR) sawmill production data series.
Throughout these declines, earlier
setbacks in business caused by COVID-19
created an inventory backlog of sawn
pallet material. Only after commerce
began reopening in the US following
the peak of the pandemic did pallet
lumber inventory surpluses begin to work
down. It is a fluid situation. As business
ramps back up for the pallet industry,
the trajectory of raw material demand
from this market sector is well above