National Hardwood Magazine - June 2015

2015

2015 MARKET ACTIVITY Continued Adam Taylor Ralph Taylor Lumber Co. Inc. Memphis, TN So far 2015 has been a profitable year for us in the lumber business. However, we have seen a definite slowdown in demand and decrease in prices since the first of the year. From what I see, the issue is an overall excess supply rather than decreased demand. Yes, the secondary manufacturers have slowed down on purchasing because they have restocked their lumber inventories as well as their finished goods inventory, but the demand for the end product is still there. We should continue to see a modest increase in the overall economy throughout the year. In 2014, most companies in the Hardwood business enjoyed a banner year. For our company this was due to a slight uptick in overall demand and the short-term inability for the industry as a whole to fill that demand, so prices skyrocketed and we enjoyed the increased margins. Export has become the major market for our kiln dried lumber. I don’t see this changing anytime soon. So we are quoting a lot of lumber, selling some and watching closely to see where this market is headed. Prices are on a downward trend. When will they reach bottom is the question. Good news is that the overall export market is still set for modest growth over last year. We mainly produce 5/4 Red and White Oak, as well as 4/4 Poplar, Ash, Hickory, Cottonwood and Gum. Railroad ties are still moving well and prices are holding up. This seems likely to continue throughout 2015. All species are moving, albeit the Oak and Hickory at lower prices since the end of last year. Our minor species prices are still holding well, especially Ash, which has actually increased since January 1. We have not had any major transportation issues. I have seen flatbed rates on some of the longer hauls increase in the past two months. Container freight is edging up; we are expecting to see a GRI on ocean freight through this spring and bookings are certainly tighter now than they were in the first months of the year. We also saw some minor issues due to the West Coast crisis. D John Mortati Peterman Lumber Inc. Fontana, CA Our market is on the flat to soft side. They’re in the same sort of scenario as we are. Things are kind of on the flat side. Not bad, but not much growth. I think that’s not just a local thing either, I think it’s all across the country. We’re bidding a lot, so there’s business out there. I think the year will come through strong; right now it’s just on the slow side. Rift White Oak is moving best for us. Poplar’s always moving, but also Red Oak, Hard and Soft Maple. In demand are upper grades for the most part, FAS, and most of them 4/4. Pricing is flat to softening. We’re expecting flat sales and softer prices on some things. Most sawmills are oversold on some things, so we’re not seeing the prices fall as fast as we think they should. However, transportation is improving now, but it got really bad for a little while. It wasn’t weather that we attribute it to, though, it’s these dock strikes, or slowdowns I should call them. Weather got in the way a little bit, but not too much. The main thing was once the containers were unloaded here, the port wouldn’t take them back. So nobody would load their containers or take them because then the driver would be stuck with that empty container on his back and nowhere to go with it. At our facility, we’ve gotten a couple of new Caterpillar forklifts and a few new bays. We personally have made some strides here. D David Whitten Bingaman & Son Lumber Inc. Kreamer, PA Demand in China is stable but matching levels of 2012, about 10 percent lower than the boom of 2013-14. Sales and customer traffic is stable, just lower than 2013-14, albeit more normal now. Supply is higher now so it feels like bust. Remember production in 2010-11-12 was still in “recovery mode” since the crash of 2008-09, so when there became a slight demand increase at that time, prices went way up as production could not be increased fast enough. European demand is in a free fall due to currency correction. The Euro is now about 20 percent lower value than October 2014, six months or so ago. So our wood is 20 percent higher to them now, which is disastrous in the short term for exports to Euro countries. 4/4 Ash all grades, 4/4 Cherry FAS and 4/4 White Oak FAS are in healthy demand and are moving well in markets outside of Europe. In regard to lumber pricing, 4/4 Red Oak, especially No. 1 Common is dropping fast (to China); 4/4 Ash is dropping a little; 4/4 White Oak FAS and Cherry FAS seem to be done dropping for now, but Common grades may see more decrease in regards to pricing. Transportation issues have stabilized some problems obtaining empty containers around the time of the West Coast port strike occurred, but that’s now cleared up. No other problems to report. This past year, Bingaman did normal upgrades of sawmill and KD lumber equipment, as well as Thermal Treating equipment. D 20 JUNE 2015 n NATIONAL HARDWOOD MAGAZINE

Joe Zona Deer Park Lumber Inc. Tunkhannock, PA Our market is fairly stable currently. There is some overproduction in some items that is putting pressure on pricing. Currently Ash is king of the hill; it is moving very well in all grades and thicknesses. Demand is strong even coupled with the fact that there is a lot of Ash being produced right now as landowners are harvesting the Ash timber before it is killed off by the Emerald Ash Borer. There are some price reductions happening in Hard Maple, Red and White Oak. The other species are somewhat stable for now. Domestically, trucks are harder to find to get lumber moved. Internationally, things are a little easier, but in the recent weeks we have had shipments rolled out for a week or two. I am not sure if it has been weather related on the East Coast ports, but that may have been a factor. At our facilities, we have added another kiln with 80,000 bf of capacity. It was online in January. We will be doing a total renovation to our saw filing room with new equipment and a CNC grinder added. It will be very modern technology that will greatly improve our mills’ band saws and milling accuracy. D Grafton Cook Missouri-Pacific Lumber Co. Fayette, MO Walnut markets have slowed from their frenzied pace of last year. Log prices remain high, and the market for available logs is very competitive. Green and KD lumber prices have begun to show signs of softening for individual items. Our domestic and export markets remain robust, and I believe we will have another good year, however, not as strong as 2014. All Walnut items continue to move well. 8/4 FAS1F is starting to soften while 4-6/4 FAS1F markets remain tight. 4/4 SEL/BTR Soft Maple is in high demand, while 4/4 No. 1 Common and 8/4 SEL/BTR Soft Maple are slower. Pricing for Walnut is generally firm, with some price negotiating taking place in export markets for lower grade lumber. As for transportation, we suffered major disruption issues during the work slowdown at the Los Angeles and Long Beach ports. Trucking has not been much of an issue. At our facility, we did extensive maintenance work on our Walnut steamer this winter. We added equipment that now enables us to use our planer line to de-stick lumber. D Ray White Harold White Lumber Inc. Morehead, KY Charlie Netterville Fred Netterville Lumber Co. Woodville, MS This year started out slower because we are so tied to export. We do believe it will be a good year when the Asian market starts back to buying. We are a little concerned with flooring markets and the price decline since we all have a lot of money in our Oak logs. Our current most popular items are Poplar, Ash and Cypress in all grades and Oak lumber in lower grades has softened but FAS is good, and No. 1 Common is okay. Recently, a new mill was added, and a new carriage is on order. We are looking at new kilns. Business better not go to hell. I have a lot to pay for. D Certainly lumber sales in our market have been steady, although prices in many species have been tempered. The first quarter was somewhat slower than we expected primarily because of the Chinese New Year and devalued Euro in Europe. Currently 4/4 Poplar and Ash are selling very well and we are unable to produce enough for the demand for domestic and export markets. I believe that these two species will remain very strong throughout the year. FAS1F 4/4 White Oak remains very robust for us as well. The increased competition for good White Oak saw logs with stave and veneer logs has limited the FAS production. Overall our sales remain strong. We have seen significant price decreases after the rapid increase last year in Red and White Oak. Across the board the Common grades particularly have been impacted with chaotic price movements. I do believe that we are seeing prices leveling out now. As I earlier indicated, Poplar and Ash are doing exceptionally well. With the Chinese New Year, we saw stocks of lumber build, thus driving prices down. I believe many mills were concerned and dumped lumber at below market prices to create cash flow. This has had an undesirable impact on pricing. Also projected low log decks were anticipated going into winter, however with the unusual cold winter most loggers were able to continue uninterrupted logging. Most Please turn the page JUNE 2015 n NATIONAL HARDWOOD MAGAZINE 21