The saga continues – we are still “waiting and seeing” how trade talks and tariffs may end up, and since some of the most significant impacts on our hardwood export markets are related to China, all eyes and ears will be on the upcoming meeting between President Trump and Chinese President Xi Jinping at the G-20 summit in Buenos Aires, Argentina.
According to the Wall Street Journal, “Treasury Secretary Steven Mnuchin has resumed discussions with his Chinese counterpart, Vice Premier Liu He, about a deal that would ease trade tension, ahead of a meeting of the leaders of China and the U.S. set for the end of the month. The two spoke by telephone on Friday, said people briefed on the conversation, as the U.S. demands that China put forward a concrete offer before negotiations on a trade deal can take place. Chinese officials are resisting and say they want to talk first before making a formal proposal. They worry that once they make a formal offer they will lose leverage, say officials in both countries.
“The Friday conversation didn’t lead to any breakthrough in those issues, but the renewed discussions indicate the two sides are trying to reach an accommodation, the officials say. Some U.S. officials who take a hard line toward China say they think the Chinese will make an offer before the two leaders meet at the Group of 20 nations summit in Buenos Aires. At most, they say, the U.S. and China might be able to reach a kind of ceasefire in the trade battle, with the U.S. refraining from increasing tariffs. That could be followed by detailed negotiations. But even a limited ceasefire may prove difficult.” (The Wall Street Journal, “U.S., China resume high-level trade talks ahead of Trump-Xi meeting”, Nov 12, 2018.)
Generally speaking, though; we have seen some continuing price decline in certain hardwood lumber species, the Hardwood Review indicates that hardwood exports were “steady in August,” and that an increase in demand from Europe and Latin America have been helping to offset the decline in Asian (mostly Chinese) demand. Of note is that Vietnam set an import record of US hardwoods in August, and European demand was termed “steady-to-slower in October”, blaming the slowing demand on the Brexit situation. Overall domestic markets remained fairly steady in October, with significant declines in September slowing a bit, though cherry, ash and red oak continued to dip slightly into November. (Hardwood Global Review, November 2018)
The following graph shows an update of lumber price trends for five (5) of our most sought-after hardwood species.
Black cherry continued to decline through September and October, but has recently leveled off at $915/mbf (4/4 #1 Common)
Hard Maple showed a slight decline in October but has steadied again at $1,030/mbf
Ash was fairly steady in September and October, but is beginning to decline again and is currently at $765/mbf
Soft Maple had remained steady through the latter part of September and all October, and remains so into November at $795/mbf
Red Oak has declined slightly since the end of October, and is currently at $685/mbf
Lumber prices by species (4/4 #1 Common) – 11/2018
(click image for additional detail)
Though last time we were anticipating a fairly steady market through the balance of this year, a lot will depend upon the outcome of the Trump- Xi Jinping meeting in Argentina at the end of this month.