National Hardwood Magazine - November 2016

U.S.A. TRENDS Supplier

U.S.A. TRENDS Supplier news about sales, labor, prices, trends, expansions and inventories LAKE STATES Modest sales are currently a theme across the Lake States region of the U.S., but contacts located there are anticipating a steady winter market. In Indiana, a Hardwood lumber salesman said, “We’re doing okay. Supplies of green lumber are plentiful. Sometimes it’s harder to get the lumber shipped to certain areas because of conflicts with lining up trucks that rely on backhauls. Otherwise we’re in a pretty good place.” A portion of the products (No. 3 and Better in all domestic Hardwoods) produced by this lumber manufacturer are shipped to export markets. The source stated, “Currently, all the really good business we’re encountering is coming from overseas customers. Right now it just seems like domestic markets are slow.” The Hardwoods currently selling well for this contact are Ash and Red Oak, while Hard and Soft Maple are slacking off. “Grade preference isn’t the deciding factor on what sells for us, because we are high grades only. I will say that White Oak is a species that you just can’t seem to get your NORTHEAST Lumber sources in the Northeast region offered mixed comments about market stability. Those whose customer base consists primarily of domestic (U.S.) end users commented more favorably on the current market than those who were heavier to exports. A Vermont lumber source, whose customer base is 70 percent domestic, said although sales have recently been “somewhat flat, they’ve continued to move at a good steady pace.” He cited specific Hardwood species that have been in demand in upper grades, including Soft Maple and Yellow Birch, both of which he said are “selling good. We have also seen Ash move along in sales okay. Red Oak sales are steady while Cherry and Hard Maple are sluggish.” He continued, “The problem we are facing is the fact that price margins are very tight between logs and lumber. It is extremely difficult to get the price spread between those two that we need. Our company has been able to deal with this well because of our diverse product offering, and we Please turn to page 45 Please turn to page 46 WEST COAST Like other areas of the U.S., the West Coast Hardwood marketplace is overall steady, with a few species experiencing strong pull. A source in California said that sales activity for Hardwood species has been higher than normal. “We were steady throughout the summer and my prediction is that it will continue for a little while at least,” he said. The strongest species for this distributor are White Oak and Walnut. He said, “The White Oak has been surging all year long. Additionally, due to the closure of some softwood mills on the West Coast in the last year, Alder has seen a considerable rise in demand as it shares similar characteristics with hemlock fir. Everyone I get in touch with seems to be having issues with keeping Alder in stock.” Levels on lumber inventory are good, the source mentioned. “A lot of our customers are big box stores, so they buy a lot of lumber at once. I can’t say I’ve noticed anything really change for them. Sales haven’t necessarily risen, but they aren’t slowing down too much either.” Low grades are known to trend up and down as the year SOUTHEAST As summer faded into fall, lumber sources in the Southeast region reported stable sales and demand for product. However, a recurring concern among those polled reflected disappointment in recent price margins between lumber and logs. This is partly due to the fact that in recent months some areas continued to be hit hard by storms and a hurricane, both of which impact accessibility to logs and ultimately lumber. Despite slim price margins, a lumber manufacturer in Alabama said both Oak species, Poplar, Ash and Cypress have been selling well. This company mills only upper grades on the species it handles. This source’s domestic customers are in the moulding and millwork industries, as well as flooring, which this mill also manufactures on a limited basis. Customers served by this facility report demand for their products this year has been stable, said the Alabama source. However, he reported a lack of price margins between logs and lumber has continued to have an adverse effect on the company’s profitability. 8 NOVEMBER 2016 n NATIONAL HARDWOOD MAGAZINE Please turn to page 47 Please turn to page 48

CANADIAN TRENDS News from suppliers about prices, trends, sales and inventories ONTARIO As the fall season was ushered in, sawmills planned their log inventories to bring in other species harvested and processed. It was reported that Hard Maple is moving but prices are less than favorable. Contacts noted that Soft Maple was a favored species since early summer. Depending on areas contacted where Red and White Oak were readily available, business was also good for these species. Most species of Hardwoods were receiving interest from both international and domestic markets. As noted, demand for Soft Maple is at a high level and remains steady. Its varied uses and characteristics appeal to designers and secondary manufacturers. Yellow Birch continues its steady pace, and also has been popular as an alternative to Maple. Landowners with Ash stands have been pushing to sell their timber as they are concerned of being infested by the Emerald Ash Borer that has hit in many regions across the province, and continues to ravage Ash trees across the country as it spreads eastward. Aspen stock is sufficient to meet demand at this time, while kiln-dried inventories are reported as high in relation to demand, especially for No. 1 Common grade. Production of Basswood was controlled over the summer months, with some supplies barely sufficient to satisfy demand. Depending on the region contacted, Red Oak markets varied. Some noted overseas market demand had been steady over the summer, however, not so for the domestic market. Some noted that there is a renewed interest with orders coming in for this species. Consumer demand for White Oak has been constant, with no sign in letting up in the near future. The Bank of Canada acknowledged that the export recovery isn’t evolving as fast as predicted amid weak growth beyond Canada’s borders. The central bank kept its key overnight interest rate at 0.5 percent in recent months, where it has sat since July, 2015. Many economists said that an eventual rate hike could be another two years away. A few argue that a rate cut may be on the table as early as next month. The bank said it is still projecting a “substantial rebound” in the second half of the year as the economy gets a lift from federal spending, rebuilding from the Alberta wildfires and recovering oil production. The bank pointed out that Cana- QUEBEC Contacts in lumber sales advised they were receiving more inquiries from the domestic market rather than the overseas one, and are more species specific. Red and White Oak were in demand, which contacts advised was due to limited supplies and lower production. Improved export markets for these species over the summer caused inventories to remain thin. Some wholesalers advised that Hard Maple and Ash had not been great sellers. With the summer being warmer throughout various regions, there was still a concern for staining, which added to the urgency to harvest, saw and sell these whitewoods. Green and kiln-dried Ash supplies continued to outpace the demand, noted some contacts in the U.S. border states. Due to the Emerald Ash Borer invasion, landowners were anxious to harvest as quickly as possible. This resulted in an excess of Ash availability and buyers being cautious in their purchases, which led to high competition for orders. Basswood sales were reported as very slow for sawmill operators as the wooden pallet industry had more raw materials than needed, and were only buying for their immediate needs. Wholesalers were having difficulty getting orders for green No. 2A and No. 2B of this species. Demand for green No. 1 Common and Better was meeting developing production and prices were steady. Some regions contacted had heavy rainfalls in recent weeks, which limited logging activities for these regions. However, most mills were operational for the short term. The concern was stain damage for the regionally important species Hard Maple. There was strong interest in green Common grades so production was shipped for this species. It was reported lower pricing was being felt for Hard Maple. Wholesalers noted that sales of No. 1 Common and No. 2A were good. As for most areas, there was a steady demand for Soft Maple, as stated contacts, with markets being better for the Common grades of this species. Interest in kiln-dried stocks also kept inventories at manageable levels. The World Trade Organization (WTO) cut its forecast for global trade growth this year by more than a third recently, reflecting a slowdown in China and falling levels of imports into the United States. The new figure of 1.7 percent, down from the WTO’s previous estimate of 2.8 percent in April, marked the first time in 15 years that international com- Please turn to page 49 Please turn to page 53 NOVEMBER 2016 n NATIONAL HARDWOOD MAGAZINE 9