Global Timber, Wood Products Markets Vacillate
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U.S. saw log prices started falling in the 2Q/14 after a three-year upward trend, due to lower U.S. lumber prices and weaker log export markets in Asia, reports the Wood Resource Quarterly (WRQ), Seattle, Wash., USA. After a healthy 2013 and early 2014, lumber markets in the U.S. started weakening in the spring with lumber prices falling more than 10% so far this year. The reduced lumber prices together with lower demand for U.S. logs in Asia in the second quarter have put downward pressure on U.S. saw log prices so far this year, according to WRQ.
The sawmilling sector in the U.S. has been in a steady comeback mode ever since the global financial crisis struck in 2008. From 2009 to 2013, production has gone up every year, and the total production increased 28% over this four-year period, at about the same pace in the South and the West. During the first quarter of 2014, production fell in the South by 1.1% compared with the same period in 2013, while production was up 2.1% in the West (most in the Inland region), according to the latest data from WWPA.
Both lumber export from and imports to the U.S. have gone up in the 1Q/14 year-over-year. Export volumes were up 18% with the biggest increases in shipments to China (+73%) and Mexico (+6%). Importation of lumber increased 5% in the first quarter with Canada (+6%) and Germany (+104%) accounting for the biggest volume gains compared with the 1Q/13, as reported by WRQ.
The recent price trend for lumber in North America has been downward after sharp increases last summer and fall. Prices in May this year were down between 8% - 17%, depending on species, from their recent peak in the beginning of the year.
Healthy log export markets to Asia during the first quarter this year and increased lumber production along the West coast resulted in continued upward price pressure on saw logs in the U.S. Northwest in early 2014. In the 1Q/14, Douglas-fir log prices reached their highest level since 2006 and prices for hemlock logs were at an 18-year high, according to WRQ. The dramatic price swings in the Western U.S. the past five years stand in sharp contrast to the U.S. South, where average prices have only moderately adjusted upward from 2009 to the 1Q/14.
With the demand for logs from both domestic sawmills and the export market in Asia weakening during the second quarter, saw log prices started to fall back in both the South and the West after having trended upward for more than three years. In May, prices for saw logs were down 5% - 15%, depending on species and region, compared with the beginning of the year.
