Business momentum for U.S. hardwood lumber to carry over into 2018

By Judd Johnson, Managing Editor, Hardwood Market Report

Business results for 2017 have U.S. suppliers feeling optimistic about 2018. Exports of hardwood lumber were trekking 13 per cent higher through the first 10 months of 2017 compared to the same period in 2016. The total volume shipped through October was the third highest of any full year (12 months); only 2016 and 2014 were higher. With two months remaining, there is little doubt U.S. hardwood lumber exports will establish a new record in 2017.

To no one’s surprise, China is the dominant force driving increased export activity. While total hardwood lumber shipments from the U.S. were up 13 per cent year to date, U.S. shipments to China had increased 18 per cent. Exports to China accounted for 54 per cent of the hardwood lumber volume exported by the U.S. worldwide. In fact, the 10 month total exported to China in 2017 surpassed the 12 month China record high set in 2016, reaching 2,026,233m3 compared to 2,006,701m3.

U.S. supplier optimism goes beyond exports. The domestic U.S. marketplace has grown consistently over the past several years. Much of that growth is closely aligned with economic expansion. After a period of retraction, markets for key industrial timber products have rebounded and currently are energised.

U.S. domestic market

Separately, the U.S. housing sector has been expanding at an impressive rate. New single family construction is projected to increase year over year by 10.7 per cent and 8.6 per cent in 2018 and 2019, respectively; these increases follow a 7.5 per cent increase in 2017. Also in 2017, expenditures on single family housing refurbishing projects surged 20 per cent over 2016 expenditures. Notably, new and refurbishing single family housing construction projects are significant to demand for hardwood flooring, cabinets, millwork, and furnishings.

Not only is demand for U.S. hardwood lumber poised for further growth, U.S. sawmills may have better opportunity to respond to any business upturn in 2018. The reason is that demand is showing encouraging signs of improvement for wood waste materials, making them less of an impediment to sawmill production and lumber supplies. Indeed, keeping bark, chips, and sawdust moved offsite has been a problem for U.S. sawmills the last couple of years – enough to prevent production from reaching its potential in 2016 and to a lesser extent in 2017.

It is imperative that all sectors of the marketplace perform at healthy levels in order to ensure a healthy U.S. hardwood lumber supply base. Such has been the case for most lumber items, and now this includes industrial timber products and byproducts from sawmill production. By and large, US hardwood lumber business has been quite stable for most all of the past two years, and conditions seem favourable for solid results in 2018.