U.S. hardwood lumber exports through April trailed the 2014 pace by 7%. With global inventories still on the high side, most buyers will take only what they need through the summer. Until the market finds its bottom this fall, buyers will only bite on larger blocks at deep discounts.
U.S. housing indicators were largely positive in April—too positive, we think, to hold up to future revisions, especially with rising home prices and rising mortgage rates challenging housing affordability.
And there isn’t much demand pull from housing markets elsewhere, either. Canada’s January-April housing starts were revised down, and May totals were the slowest for any May since 2010. April home prices in 69 of 70 surveyed Chinese cities were lower than a year ago, and Japan just recorded its twelfth consecutive month of year-on-year declines in housing starts.
Weak common-grade hardwood sales will dampen the overall market feel for a few more months, but there will be some bright spots.
Kiln-dried FAS/1F lumber sales are generally decent to strong, and prices have begun to firm up or at least level off for several species, including Soft Maple, Hard Maple, Red Oak and White Oak. Cabinet sector demand is up on the year and should accelerate in the fall. And, demand for crossties and cants will remain strong.
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