Well, I guess in some ways we are still “waiting and seeing” how the continuing trade/tariff issues will affect our hardwood logs and lumber markets. We’ve seen some declines in pricing for the higher valued hardwood species (black cherry, maples, oaks) over the last few months, as the markets are figuring out how to deal with the trade tensions – particularly with China (our biggest importer). The good news is that the new USMCA agreement (NAFTA “replacement”) has lessened trade tensions between the US, Canada and Mexico (certainly they are our other big hardwood importers), and other southeast Asian markets have expanded a bit – particularly in Vietnam. Our domestic markets have been slowly but steadily improving as well.
A recent article in the Hardwood Weekly Review (Oct 5, 2018, Vol. 34, Issue 3) discusses some cautious but promising news about our hardwood markets recovery process. One sign of this is that lumber price declines have “slowed or leveled off”, and there are signs that the Chinese buyers that backed off a few months ago are starting to buy again. Secondly, apparently the drop off in Chinese buying was not as severe as was reported and as anticipated – shipments remained “quite strong in June and only fell back 20% in July.” Another discussed possibility is that the pullback in purchasing by China during the summer was intentionally planned to “disrupt the lumber markets and erase two years of steady price gains.” China had also built up excessive lumber inventories – mostly of red oak – and that certainly would cause a natural slowdown of buying, which affects pricing, etc.
It seems that China still has a very strong interest in and demand for US hardwood resources, however, their domestic economy weakened a bit, and that – coupled with the incredible supply they purchased from the US – led to demand/price changes here. Reports are that the “underlying demand is still there. If anything, Chinese buyers just wanted to regain control of market pricing.” We are now also into the time frame where “China typically buys heavily ahead of shipment disruptions related to its New Year. If inventories have been depleted, or at least normalized, that will provide additional incentive to purchase this fall.” The overall take way from these things is that though we probably won’t see an immediate and significant return to the pricing for quality hardwoods that we saw before the tariff situation began, we probably won’t see much further decline in pricing either.
Below is an updated graph showing the trending of lumber prices for five (5) of our most sought-after hardwood species. It’s evident that pricing has leveled off for each of the species depicted, with black cherry currently at $980/mbf (4/4 #1 Common); hard maple at $1,055 (hard maple jumped above the price of black chery back in early September); ash was last reported at $825; soft maple at $795; and red oak at $700/mbf. We anticipate that these prices will maintain their current levels if not slightly improve between now and the end of the year – we’ll see!
Trending of lumber prices for five (5) of our most sought-after hardwood species, October 2018