National Hardwood Magazine - November 2014

U.S.A. TRENDS Supplier

U.S.A. TRENDS Supplier news about sales, labor, prices, trends, expansions and inventories SOUTHEAST LAKE STATES WEST COAST NORTHEAST Overall sources in the Southeast say Hardwood lumber activity is fair. “Until a month ago business was brisk,” a supplier in Georgia commented. “It’s only been the last few weeks that we have seen a slowdown. The odd thing for us this year is that it seems to be opposite of what is customary. In the months that we are typically slow, we had the strongest business. We can’t figure out why. All of our sales are domestic and regional and there was a lot of activity. Now things have slowed down in a time of year where we’re usually busy. It’s perplexing because there is no real rhyme or reason to why. Maybe the ebb and flow of things has just changed, but it was a whole different experience this year.” In Tennessee a contact said, “We found that a lot of harder to get Hardwood items became easier to get this summer. Supply and availability definitely increased this summer. We’re getting offered a lot more lumber and in some cases at substantially lower prices. Red Oak demand seems to have dropped off and it is much more available. The prices have come off a significant percent in our region. My understanding is the drop in China’s consumption is the underlying reason. After two or three months of that it just backed things up and people started dropping prices to move wood. That’s very common, but I think that is the primary reason. The Common grades of Cherry have come off and they are much more available. That is a significant change in our market.” As for inventory the contact said, “Our inventory has stayed the same. We’ve maintained a consistency here. The overall inventory levels throughout the industry have gone up. A lot of Alot of contacts in the Lake States region, such as one in Michigan, report slowing Hardwood lumber market activity over the past couple months. “Orders are down and exports are slow,” he explained. “Walnut is our best mover right now followed by Ash and Hickory. Cherry is the slowest species. With Hard and Soft Maple it all depends on the grades; some grades are moving better than others. The uppers are moving but the lower grades are kind of stagnant.” The source said availability good for most items with the exception of Walnut. “Transportation is fair. It’s still not easy to call and get a truck, but it is better than it was six months ago.” As for his customers’ markets he said, “Most of our customers are fairly busy and they expect to remain stable during the winter. The remainder of 2014 will be slow but business will pick up early in 2015.” In Wisconsin a contact said, “The availablity of lumber supply is more than the last month or so. Our business is still on track for what we have set for goals for this time of year. Due to this time of year our purchases of green have been adjusted for the season, but overall it is still more than what we were purchasing this time last year.” Like others in the region he said Walnut is his best selling item. “Sales are still good. Red and White Oak are still moving well. Hard and Soft Maple and Ash are decent. Hickory is going along well but we are in between seasonal cuts of that particular specie and we are low on Hickory inventory but that will adjust itself. We are doing more value-added business than we’ve ever done. And I think that Key players in the West Coast Hardwood lumber industry indicate activity is steady. A Hardwood supplier in California commented, “Compared to a year ago, business is very good. Construction has picked up just about everywhere. It’s hard to say sometimes if that is due to the overall improvement in the market or if it is relative to some things that we have done internally. We have greater exposure than we’ve ever had before. “It’s not that we’re out of the recession but people get to a point where they have to build things. Projects can only be put off so long. This time around there were a lot more people providing lumber and wood products. The recession hurt a lot of people. A lot of mills went out of business, a lot of importers gave up and as a result there is a lot less competition than there was five years ago, which also plays an important role. The demand may not be where it used to be but there are fewer players. Those of us that weathered the storm have built even greater loyalty with our customers.” When asked about the changes his operation made to “stay in the game”, the contact offered, “We tightened up our core. Where a lot of companies were diversifying products and searching for new markets, we stayed the course and honed in on doing what we do really well. We focused on serving our existing customers and how to penetrate the market with our core product line and it’s been successful.” In Washington a Hardwood supplier said his inventory levels are at reasonable levels currently and prices are up. “Prices have to go down soon,” he explained. Sources in the Northeast region continue to report steady Hardwood lumber activity. “There is a little more production around now than what there has been but most items are still moving,” a contact in Pennsylvania commented. “Domestic markets are about the same as they have been but export markets are a little more challenging simply because the Chinese have backed off in purchasing.” He continued, “The Chinese were buying so much Red Oak and that seems to be adding extra on the market now. Usage is still up pretty good, there’s just a little more to choose from.” As for species activity he noted, “Hickory, White Oak and Walnut are all moving pretty good. If anything is slow it’s probably Cherry and Hard and Soft Maple. Generally our availability is good right now.” In New York, a Hardwood supplier said, “Transportation hasn’t been difficult for us. Others are having a lot of problems but I think it really depends on where you’re located. I know if I have a load in West Virginia it's a nightmare to get it there. It really depends on your location more than anything.” When asked about his customers’ markets he said, “They’ve all had a good summer and everyone is reporting stable business conditions. I won’t say they’re crazy but they are steady.” Looking ahead at the year-end he said, “I think we’re going to see a slowdown and a loss of production because of hunting season, holidays and winter weather. There is a little more lumber around right now, but as we move into those months things are going to tighten up. I Please turn to page 44 Please turn to page 44 Please turn to page 45 Please turn to page 56 6 NOVEMBER 2014 ■ NATIONAL HARDWOOD MAGAZINE

CANADIAN TRENDS News from suppliers about prices, trends, sales, and inventories QUEBEC Manufacturers, wholesalers, and endusers are focusing their attention to year-end and to the winter season and early spring. Most feel that sawmill production of whitewoods will likely increase through fall and winter. It’s the time of year for restocking inventories of those species. It is a challenging time of year where forecasting is difficult as winter weather sets in and if it will slow down production and kiln drying processes causing a tightening of supplies in the marketplace. For some in the industry, it is a time to control raw material costs and inventory. For the regionally important species, Hard Maple, contacts noted that the growth in demand was slow. Some turned to Soft Maple instead, along with lower cost alternative species. According to the Greater Montreal Real Estate Board, Montreal’s housing market dropped in sales toward summer’s end, while prices were in a holding pattern. Home sales in the metropolitan area fell 6 percent during the same timeframe from a year earlier, to 2,234, according to their latest report. The median price of a single-family home in the Montreal area remained stable compared to a year ago at 5,000. The median price for condos was off by 1 percent at 0,150, the first drop in eight months for the category. The Minister of Natural Resources and Minister for the Federal Economic Development Initiative for Northern Ontario tabled the State of Canada’s Forests Report 2014 in September. While the industry is showing strong signs of growth in some segments – lumber in particular – it is challenged by market trends in other areas, the report notes. Nonetheless, the pace of recovery in 2013 allowed the industry to post some of its highest revenues in many years. The value of Canada’s forest product exports increased by 13.1 percent from 2012 levels – rising to .4 billion from .1 billion – and production levels were higher across all market segments. The report also demonstrates to Canadians and the world that Canada is a leader in sustainable forest management and is committed to transparency in reporting on how its forest resources are managed and maintained. Canada’s forest lands include over 150 million hectares of forest land certified by third parties as being sustainably managed – 41 percent of the world’s certified forests. The Government of Canada is providing assistance to the forest industry to diversify its markets and bring innovative, highvalue products to the marketplace. Since 2007, the Government has invested .8 billion in support of the ongoing transformation and renewal of Canada’s forest sector. To view the report, you can download a PDF version at this website: cfs.nrcan.gc.ca/pubwarehouse/pdfs/35713.pdf. ■ ONTARIO Wet weather conditions delayed logging recently in most parts of Ontario. However, there were no major effects as supply was reported as being steady. However, it did cause some concern for drying schedules as the threat of stain was a possibility. The weather caused sawmills to speed the rotation of species in production. Wholesalers were cautious with their purchases for Hard Maple, Red Oak, and other whitewood species. They didn’t want to build up too much inventory, and have to reduce prices to project sales values. Contacts noted inquiries from China have started up again. This is a good sign that overseas markets may improve. Thus there is cautious optimism about business overseas in the air. Some contacts note there is ample-to-too-much production of green Hard Maple. Despite the wet weather in most parts, there were enough logs to sustain sawmill production. Prices are reported as pressured and mixed in reported activity. There is a steady flow of business for Ash, with supplies having improved, note some contacts; however, they add that it is not adequate to cover anticipated needs. On the other hand, Basswood supplies are described as adequate to ample, resulting basically from unusually high sawmill production over the summer, and some buyers were only purchasing for short-term needs. Business climate for this species is seen as more competitive, but not pressured. Birch production was greater than expected, but volumes not being excessive over the summer and early fall. The almost even balance between supply and demand was reflected in stable prices. According to the Conference Board of Canada new analyses released recently, wood products manufacturers can look forward to brighter, though only slightly brighter, futures. The Board notes that by most measures, including profits – the all-important bottom line – the wood products manufacturing industry has been slowly extracting itself from a bad place since the recession of 2008. The Conference Board analysis in 2011 shows an industry-wide loss of million, followed by combined profits of 6 million in 2012 and a robust .4 billion in 2013, a spike possibly explained in part by a dip in employment, and thus in costs, to its lowest point in recent years. Thanks to a healthier U.S. housing market and the improved macroeconomic outlook, employment in the sector is forecast to rise a healthy 10.7 percent to 114,000 this year. But even though revenues will also rise slightly, profits will dip back down to just below .3 billion. The forecast going forward to 2018 is for generally steady increases in the four-to-five-percent range. The Board adds, the wood side of the industry is drawing strength from the development of engineered wood products and green options to meet growing market demand, and it’s making increasingly better use of what used to be waste wood. Its outlook is also enhanced by regulatory changes that are allowing wooden buildings to exceed four floors in Canada. On the other hand, despite a recovering U.S. market, the Please turn to page 56 NOVEMBER 2014 ■ NATIONAL HARDWOOD MAGAZINE 7