National Hardwood Magazine - October 2018

U.S.A. TRENDS Supplier

U.S.A. TRENDS Supplier news about sales, labor, prices, trends, expansions and inventories LAKE STATES The lumber market in the Lake States region is steady, but marginally sluggish, sources report, as the industry, at the time of this writing, is facing possible export tariffs on Hardwood lumber this fall. A salesman at an Indiana sawmill said the market is good, although certain species, particularly those sold to the export market, are moving more slowly. “Overall, everything seems to be good. Only the upper grades in Red Oak and Hickory are slower, and I would say that’s because those species and grades are usually bought by the Chinese,” he stated. He added that crossties and pallet cants are “on fire,” and Common grades of all species are doing very well. Trucking is a problem in his area, he said. “It’s an issue nationwide. There are not enough truckers, that’s the biggest problem—not having enough truckers to cover the amount of loads we have,” he added. Log supply is not a problem, he stated. “We’re getting exactly what we need for whatever the market demand is; we are doing pretty good on log supply,” he commented. His customers are mostly end users, particularly flooring, cabinet and moulding and millwork manufacturers. At a Minnesota sawmill, a source said the market was holding steady, but added he’s seeing signs of an impending slowdown. “The market is doing fine right now, but I think customers are taking a bit of a breather to see what lumber prices are going to do,” he commented. “The customers who do ongoing business with us are continuing to buy on a regular basis, while some of those who just buy by the truckload are starting to take a break.” He said all grades and thicknesses of Hickory, Hard Maple and White Oak and Northern Red Oak are selling well, adding that only Appalachian Red Oak seems to have slowed up some. Problems with transportation have improved since the beginning of the year, he stated. “It’s eased up a little bit from where it was. I think it’s definitely better, but I also think some of that is from less lumber moving and some differences in drivers’ availability,” he commented. In his area, log supply is not a problem currently. 18 OCTOBER 2018 n NATIONAL HARDWOOD MAGAZINE NORTHEAST Lumber suppliers in the Northeast report the market is slow, and at the time of this writing, affected by the possibility of a trade war with China. A salesman with a Connecticut sawmill said despite rebuilding the mill and having the capacity to cut 170,000 board feet a day in heavy thicknesses, the market is slow, and the future of his business depends on doing business overseas. “We opened up this sawmill with the intention of cutting thick stock for the export market, and that market is challenging,” he stated. “We’ve got this new band sawmill and it will be spitting out boards like bullets, but if this trade issue doesn’t get resolved, us, like everyone else, will be trying to force lumber into the domestic market, which will create oversupply.” He sells Hard and Soft Maple and Cherry mostly for the domestic market and Red and White Oak and Ash, mostly for the export market, in 4/4 through 8/4 thickness and all grades. “Once the mill is up to speed, we’ll be selling dry as well as green. We’ll still be producing more than we can dry,” he commented. He said he’s not having problems with trucking mostly because his company owns a fleet of seven trucks, and is looking at running 10 trucks. “We don’t want to be a trucking company, but we do want our loads to go out and not sit for weeks. So that’s giving us an advantage, that we can ship within a couple of days because we have our own trucks. We have trucks that just go to the port, but that will change too if things change with China,” he added. “But overall, we’ve been insulated from the trucking issues that I know a lot of other folks in the industry are facing.” He said supply is excellent because his mill is situated in a small town near the woods and many state-owned forestlands, as well as some forests owned by Timber Management Organizations (TMOs). “We have plenty of timber in this area to support this mill,” he stated. “The only thing that hurts us is it’s available only on a bid basis, so we pay a good price for it.” His customers are about an equal percentage of end users, distributors and international wholesalers. At a Pennsylvania sawmill, a saleswoman also said the market seemed like it was slowing down. Please turn to page 85 Please turn to page 85

SOUTHEAST Market activity is slowing down in the Southeast region, sources say, mostly due to talk of impending tariffs on Hardwood logs and lumber as well as tight log supply. A salesman at an Arkansas sawmill said while the domestic market is “fair,” misgivings about tariffs are affecting the export market. “The export market has slowed due to the uncertainty over tariffs,” he commented. The primary species he sells are Red and White Oak in 4/4 and 5/4; he also markets a 12-and-wider proprietary grade in Red Oak. The secondary species he handles are Ash, Sap Gum, Cottonwood, Pecan, Sycamore and Hickory, all in 4/4. “We’ve had a ride on our mixed Hardwoods. Sap Gum, people have been wanting that,” he stated. “Of course, flooring grade Oak is selling great. So are the industrial products, cants and such products for the pallet industry; all of that is still strong.” Transportation is hard to get, he noted, adding that while he’s managing to get his loads shipped, he’s paying more to do so. “There are higher rates to pay, but we’re managing right now. But if you need to sell something in a particular lane and you’re not a regular customer, you are going to have to pay to get it shipped,” he stated. He said he has a decent log supply. His customers include end use manufacturers and concentration yards, as well as distribution yards, both overseas and domestically. At a Tennessee sawmill, a source said the market is challenging. “Everybody’s nervous about these tariffs, so we’re not moving a whole lot of Red Oak, and our White Oak has kind of slowed up,” he commented. “Poplar moves really well for us; we’re able to ship a lot of that domestically. We’re having a hard time selling Hickory in Face and Common, but we can move the No. 2 Common in Hickory. I sell to a company that buys a lot of Red Oak and Hickory, Face and Better, and I haven’t been selling a lot of that lately; that has a lot to do with the export market.” Trucking has gotten a little bit easier in his area, he said. “As far as domestic transportation, there have been some cases where I’ve been pleasantly surprised,” he commented. “We shipped a load to Pennsylvania from here WEST COAST Along the West Coast, lumber sources report an overall steady market, although most say the export market is showing signs of a slowdown. A lumber salesman in Oregon said business has been good, although sales of upper grades are slower. “The high grades are definitely slowing, catching the cold from China,” he commented. “Low grades are still holding their own; I’d say they’re flat, they’re not going up at this point, but they’re not falling, because furniture frames are strong, pallet sales are still very strong, so lower grades are not showing vulnerability.” He sells most species of Northern Hardwoods, and said Red Oak and Cherry are the only two he’s having difficulty selling. “Cherry and Red Oak have definitely fallen way off, almost to the point where we’re going off the market with those species,” he stated. “We’re not a huge company; some of our competitors have 30 mills and have to move the material or they have to shut down. We’re just trying to refocus and sell elsewhere, to other export markets or domestically. So we’re not caving in. We generally can weather these kinds of storms a little better than some of the larger producers.” One concern for him is trucking, which he said remains a challenge. He also noted that containers were difficult since, at the time of this writing, people were trying to get lumber shipped before any tariffs went into effect. “Containers are tight for exports to get to China before any tariffs are enacted. We’re running into containers that are priced very high. I did sell some product last week, and it seems all our customers are feverishly trying to get containers,” he commented. “I’m hearing other competitors out there are offering to split the tariff or pay the tariff—if those tariffs go into effect—on product they’re shipping if it shows up after Oct. 1. At this point, we’re not playing that game. We’re definitely selling more domestically.” Since he sells along the West Coast, he deals more with intermodal transportation, which he noted was steady. “Intermodal’s remained more obtainable. So that’s been good,” he stated. Log supply is good, he said, adding that fewer log exports has helped availability. “Since China is stopping a lot of exports by adhering to the formaldehyde regulations, log availability is much bet- Please turn to page 87 Please turn to page 88 OCTOBER 2018 n NATIONAL HARDWOOD MAGAZINE 19