Our outlook for the balance of 2013 is for accelerating global demand, limited increases in North American hardwood production, and firming prices. Strong and sustained demand for board road, crane mats, railroad ties and pallet stock was crucial for sawmill survival during the recession and will continue to attract significant mill attention during the recovery.
While housing growth has stagnated, the pace this fall should remain above last year’s pace, keeping flooring demand elevated and further intensifying competition for available logs and industrial lumber.
Grade lumber markets look equally strong through year-end, led by rapid and widespread expansions in export demand. Domestic lumber consumption will slow a bit as fall fades into winter slowdowns in new home construction and remodeling, but so many yards and end-users will be working to replenish depleted inventories that overall demand should feel relatively steady. Production increases will lag combined export and domestic demand, however, pushing prices higher through year-end. Only margins are in much jeopardy of decline.
In inflation-adjusted terms, hardwood lumber prices are still well below the prices of 20 years ago (this is further detailed in the Aug 30 and Sept 6 editorials in the Weekly Hardwood Review). However, after decades of decline, surviving mills can finally look back at modest real price increases for most items since 2009.
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