U.S. hardwood lumber exports totaled 114 million board feet in March—the latest month with available data—which was 3% below February. Combined exports to non-Chinese destinations in March climbed 6% over February, but exports to China declined 15% as some buyers did not immediately re-enter the market after Lunar New Year. Exporters reported decent business in May, though still-limited supplies of many items and increased buyer resistance to price increases constrained sales growth.

Many Chinese contacts said demand leveled off in May in response to higher red oak, white oak and poplar prices. Vietnamese demand climbed steadily throughout 2011 and the first part of 2012, but has been slowly unwinding since April 2012. The devalued Japanese yen, if not directly responsible for reducing U.S. hardwood lumber sales to Japan, is at least limiting potential market growth.

European demand improved slightly in May, as many buyers restocked near-empty warehouses. Still, volumes were well below historic averages. Hardwood markets remained difficult in Italy, Spain and Portugal, with unemployment rising, new home construction falling, and credit tight. However, inventory replenishment activity pushed demand up slightly. British purchasing leveled off due to heavy resistance to price increases. German demand for high-end lumber was fairly good.

Contacts in Mexico reported seasonally slower wood products manufacturing activity but gave mixed reports about hardwood demand.