While prices increases will level off in 2014, it is unlikely we will see a wholesale retrenchment. Some substitution for North American hardwoods by other species, or even by non-wood products, may occur in some markets and applications. But lumber suppliers need not be concerned about significant market share erosion.
With Oak and Maple prices expected to remain high, European Beech and Russian/Chinese Birch imports will grow, but the difficulty of managing a supply chain that spans the globe will keep most domestic manufacturers loyal to North American hardwoods.
Exports will continue to set the market pace in 2014…and will set another shipping record, assuming producers can generate the volume and buyers will keep paying the price. While the U.S. softwood lumber industry is nearly three times as large as the hardwood sector, 2013 hardwood lumber export volumes were only 8% below softwood lumber exports.
Domestic hardwood demand should recover at least as fast in 2014 as it did last year. Improvements in employment, the overall economy, and new home construction will pull up demand for cabinets, flooring and furniture, as well as for railroad ties, pallets, and timbers for the energy sector. The phasing out of quantitative easing will push mortgage rates higher, but the Fed won’t let rates rise enough to derail the housing recovery.
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