issue 10 october 2018 current trends market commentary · sel&btr (net) cumaru. 4/4 3700...

20–Year Trends in US Imports of Tropical Hardwood Lumber

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Volume III~ Issue 10 ~ October 2018

Current Trends Market CommentaryLead Story – Hurricanes Impact SoutheastHurricanes Florence and Michael battered large sections of the US Southeast with heavy rains, damaging winds, and catastrophic flooding in September and October. Tens of thousands of homes and businesses were destroyed or se-verely damaged, with eastern North Carolina and the Flori-da panhandle hardest hit. The North Carolina ports of Wilm-ington and Morehead City were closed for up to 11 days due to Florence, with closures at South Carolina and Virginia ports ranging from one to three days. Michael was generally less disruptive to major port operations, though did tempo-rarily close some ports on the Gulf and Atlantic coasts.

Large volumes of tropical hardwood lumber enter the US through ports in the Southeast. The region is also home to several sizeable tropical hardwood sales operations and is a significant market area for tropical hardwoods.

After Florence passed through, some import yards in the Carolinas remained closed for up to two weeks to make re-pairs and for employees to attend to their affairs. Inbound

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Monthly US Import Values of Tropical and TemperateHardwood Lumber from non-Canadian Sources

$30

$25

$20

$15

$10

$5

$0

Au

g-1

5

Nov

-15

Feb

-16

May

-16

Au

g-1

6

Nov

-16

Feb

-17

May

-17

Au

g-1

7

Nov

-17

Feb

-18

May

-18

Au

g-1

8

Tropical

Temperate

Source: US International Trade Commission Graph: HMR

Tropical Value -6% Year-over-Year Jan. - Aug. 2018

Temperate Value +1% Year-over-Year Jan. - Aug. 2018

The 10 slowest months for US imports of hardwood lumber from Peru during the last 25 years occured between August 2017 and August 2018.

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Indonesia was the 7th larg-est non-Canadian supplier of hardwood lumber to the US through the first eight month of 2017 but fell to 13th place during the same period in 2018.

Import Newsletter October 2018

HMR Import Newsletter™

and outbound lumber shipments were delayed accordingly. Since fewer import yards were in Michael’s direct path, the immediate impact on lumber shipments was not as severe. Howev-er, both hurricanes caused catastrophic dam-age that will affect business activity for some time. Reconstruction should eventually bolster demand for all kinds of forest products in the Southeast, including tropical hardwood lumber.

Trade and Tariff NewsOn September 24, 2018, the US began impos-ing 10% tariffs on a variety of products imported from China, including hardwood lumber. China immediately imposed 10% retaliatory tariffs on a host of products imported from the US, also including hardwood lumber. Both the US and Chinese tariffs could rise to as much as 25% on January 1, 2019 if the two countries fail to re-solve their trade disputes. Most hardwood lum-ber importers in the US do not source from Chi-na, though many are watching closely to see if the tariffs have secondary impacts, such as bol-stering Chinese demand for tropical hardwoods.

On September 30, the US, Canada, and Mex-ico announced they had concluded the United States-Mexico-Canada Agreement (USMCA), which will effectively replace the North Amer-ican Free Trade Agreement, assuming it is ap-proved by all three governments. For more in-formation on USMCA, go to https://ustr.gov/.

Market OverviewSales contacts report that tropical hardwood demand now varies from region to region, sometimes significantly. Demand is quite good in certain areas but is flat or slow in others. Markets on the West Coast are among the most active, while hurricane-related disruptions

Balsa

Ipé

Sapele

Keruing

African Mahogany

Spanish Cedar

Meranti

Virola/Imbuia

Genuine Mahog.

Teak

Jatoba

Andiroba/Padauk

Iroko

Aniegre

Tropical Total*

f

Brazil

Germany

Ecuador

China

Malaysia

Congo (ROC)

Cameroon

France

Mexico

Uruguay

World Total*

2,951,918 3,102,331 +5%

2,600,247 3,157,412 +21%

2,510,423 1,514,728 -40%

3,024,371 922,395 -70%

1,195,258 813,928 -32%

516,490 391,075 -24%

805,454 656,735 -18%

364,382 1,964,697 +439%

82,622 41,523 -50%

165,667 724,103 +337%

17,397,122 16,378,547 -6%

22,853,954 36,787,329 +61%

20,528,689 20,542,247 0%

20,370,225 13,870,243 -32%

11,484,812 11,743,269 +2%

5,069,147 7,907,937 +56%

3,667,124 7,205,866 +96%

9,564,180 6,370,753 -33%

2,239,678 5,318,282 +137%

677,073 5,108,551 +655%

1,391,855 4,653,921 +234%

126,914,674 148,268,307 +17%

Market Commentary cont'd 2,648,972 1,510,491 -43%

949,088 1,065,182 +12%

986,374 555,471 -44%

946,546 548,692 -42%

744,441 656,311 -12%

251,678 383,872 +53%

329,639 369,043 +12%

357,179 505,050 +41%

370,314 128,805 -65%

245,322 144,905 -41%

46,607 94,485 +103%

424 51,691 +12100%

11,016 15,253 +38%

77,961 13,558 -83%

9,017,607 7,016,472 -22%

LeadingTropical Species Aug-17 Aug-18 %

– Board Feet – Chg YTD 2017 YTD 2018 %

– Board Feet – Chg

20,543,518 13,920,664 -32%

8,850,669 9,513,336 +7%

9,421,393 6,649,548 -29%

4,398,430 6,444,053 +47%

4,771,286 3,667,547 -23%

3,050,216 3,448,494 +13%

2,197,732 2,780,743 +27%

2,503,643 1,845,214 -26%

2,034,184 1,752,000 -14%

1,805,386 1,460,918 -19%

737,238 780,879 +6%

173,293 298,709 +72%

246,170 120,755 -51%

253,796 38,980 -85%

68,985,139 59,660,773 -14%

Beech

White Oak

Baltic/Russ. Birch

Walnut

Pop./Aspen/Ctnwd

Alder

Temperate Total*

2,520,168 3,209,528 +27%

658,854 2,624,822 +298%

66,521 125,839 +89%

0 36,015 --

0 107,196 --

27,117 18,643 -31%

8,379,515 9,362,075 +12%

LeadingTemperate Species Aug-17 Aug-18 %



20,132,953 20,066,432 0%

4,189,546 7,593,975 +81%

1,338,468 1,118,568 -16%

24,151 473,273 +1860%

222,866 304,640 +37%

68,216 211,003 +209%

57,929,535 88,607,534 +53%

LeadingCountries Aug-17 Aug-18 %



Source: US International Trade Commission

continue*Data in tables exclude Canada

"Reconstruction should eventually bolster demand for all kinds of for-est products in the Southeast, in-cluding tropical hardwood lumber."

2

https://ustr.gov/



Ipé

Jatoba

African Mahogany(Cameroon/Ghana stock)

Genuine Mahogany(South/Central American stock)

4/4 5425 (5100-5700) 5/4 5475 (5175-5775)

4/4 3000 -25 (2900-3125) 5/4 3075 -25 (2975-3200) 8/4 3300 -50 (3175-3400)

4/4 2900 (2775-3000) 5/4 2925 (2800-3025) 6/4 2950 (2825-3050) 8/4 2975 (2850-3100)

4/4 5900 -50 (5650-6150) 5/4 5925 -50 (5675-6175) 6/4 5950 -50 (5700-6200) 8/4 5975 -50 (5725-6225)

Sel&Btr (Net)

Sapele

Spanish Cedar(African stock)

4/4 3050 (2950-3200) 5/4 3075 (2975-3225) 6/4 3100 (3000-3250) 8/4 3125 (3025-3275)

4/4 3000 (2875-3100) 5/4 3025 (2900-3125) 6/4 3075 (2925-3175) 8/4 3100 (2950-3200)

Sel&Btr (Net)

Cumaru

4/4 3700 (3550-3850) 5/4 3800 (3650-3950)

Prices are in US dollars per thousand board feet for kiln dried lumber measured after kiln drying (“net tally”), FOB US or Canadian import yard. Prices are presented only as a guide.

© 2018 HMR Import NewsletterTM

This publication is copyrighted under the statutes of the United States.

FROM

AFRICAN MAHOGANYTO

ZEBRAWOOD THE POWER OF POSSIBILITIES

FROM

AFRICAN MAHOGANY TO ZEBRAWOOD

For over 20 years our facility in Currie, NC has served as a focal point for exotic hardwood processing and distribution.

For more information, visit www.northwesthardwoods.com.

1753 Porter Road Currie, NC 28435 USAPhone: 910-283-9960Toll Free: 800-688-2882

THE POWER OF POSSIBILITIES

3



Market Commentary cont'd

Asia/Oceania

Africa

South America

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

*201

8

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

*201

8

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

*201

8

100

90

80

70

60

50

40

30

20

10

0

40

35

30

25

20

15

10

5

0

50

45

40

35

30

25

20

15

10

5

0

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n Bo

ard

Feet

Mill

ion

Boar

d Fe

et20–Year Trends in US Imports of Tropical Hardwood Lumber Source: US International Trade Commission

Graph: HMR

*2018 Annualized from Jan-Aug. data44


HMR Import Newsletter™5

http://www.ohc.net/sitco






to residential flooring manufacturers and remain decent to truck trailer flooring factories, according to importers. De-mand remains slow from the furniture industry and also from stair manufacturers. Business has quieted down in the decking sector, as is normal for this time of year.

Comments from buyers and sellers suggest overall tropical hardwood lumber supply in North America has increased the last couple of months, though is far from overwhelming markets. Reports about West African shipments are mixed; some buyers are having success using ports other than Douala, but others are not. A number of sales operations are low on or completely out of key Sapele items.

Species Trends

Spanish CedarThe largest regional market for this species is the US Southeast. With Hurricane Florence temporarily delaying shipments from some import yards in the Southeast and Hurricanes Florence and Michael both disrupting con-

have slowed activity in the Southeast. Business is often described as highly price competitive, even for species that are not in abundant supply. Some blame this on fading distinctions between various links in the supply chain and overall greater sales competition.

The distribution yard sector is, by many accounts, the busi-est North American market for tropical hardwood lumber at present. That said, distributors continue to purchase mostly for immediate needs, keeping on hand inventories of trop-ical hardwoods relatively low even though lead times have increased this year due to logistical issues. As such, mixed truckloads or containers comprise a high percentage of or-ders from distribution yards.

A number of contacts indicate sales to the commercial mill-work sector moderated in the last 30 days, though most still describe that market as steady or good. Solid wood contin-ues to lose market share to non-solid and non-wood materi-als in residential moulding production, keeping demand flat despite growth in new home construction and remodeling.

Tropical hardwood sales are showing modest improvement continue

US Imports of Hardwood Lumberfrom Central America

0 250 500 750 1,000 1,250 1,500 1,750 2,000

Guatemala

Costa Rica

Belize

Panama

Honduras

Nicaragua

Thousand Board Feet

Total imports from Central America equaled 1.4 MMBF during the first eight months of 2018, down 47% from the same period in 2017.


Graph: HMR

Jan - Aug 2017Jan - Aug 2018

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IpéNorth American demand for Ipé lumber has cooled off since the end of summer, paralleling the seasonal slowdown in decking markets. That said, the species is still moving at a decent pace to decking manufacturers in areas with mild climates, and overall demand is reportedly higher now than at the same time in recent years. The volume of Ipé used in residential flooring and flooring trim has not meaningfully changed from a month ago; it remains a consistent niche market. Broadly lower Ipé prices in late summer drove re-ductions to the published figures in last month’s issue. No-tably, prices reported by some sales operations have since rebounded, though do not warrant any changes to the list-ings or ranges as of yet.

JatobaFlooring and stair manufacturers are showing more interest in Jatoba now than earlier in the year, according to several importers and distributors. Business is by no means boom-ing, but it is better. Replenishment of depleted inventories may be driving the bump in sales rather than an increase in

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struction activity in the region, Spanish Cedar business has slowed of late. However, underlying demand in the South-east is reportedly decent, so sellers expect the slowdown to be short-lived. Market circumstances in other parts of North America are little changed from a month ago; that is, demand is holding steady in the Northeast but is slow elsewhere. Reported prices hold the published listings and ranges in place this month.

(See page 3 for price listings and prevailing ranges for Spanish Cedar and six other imported species.)

CumaruDecking manufacturers and distributors of lumber species used to make decking tend to reduce lumber inventories in the fall due to the seasonal nature of outdoor construction activity. This year is no exception. Sales contacts report that demand for Cumaru – which is most commonly used in decking production – declined during the last 30 days and is now quite low. Some companies are offering price incentives to generate orders. The top sides of the 4/4 and 5/4 ranges are lowered accordingly.

US Imports of White Oak from Europe10

9

8

7

6

5

4

3

2

1

0

Mill

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Bo

ard

Fee

t


Graph: HMR

*20182017201620152014201320122011201020092008

*2018 Volume Projected from Jan-Aug Data

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underlying demand, though it is too soon to tell. Meanwhile, prices are being pressured lower because large volumes of Jatoba entered North America in recent months. Information from buyers and sellers takes down the published 4/4, 5/4, and 8/4 listings, as well as the 8/4 range numbers.

African MahoganyIn North America, African Mahogany and Sapele are used in many of the same applications and are often priced with-in $100/MBF of one another. For these and other reasons, many in the tropical hardwood trade expected rising de-mand and prices for Sapele during the past 12 months to similarly bolster demand and prices for African Mahogany. That has not occurred. Overall demand for African Ma-hogany has remained flat, notwithstanding good ongoing business in the western US and other selective regions. Moreover, price increases during the 12 months ending in October were about half as large for African Mahoga-ny as Sapele. Finally, some importers are now discounting African Mahogany to move out extra inventory, which is generally not the case with Sapele. Reported African Ma-hogany prices are in very wide ranges, with both upward and downward movements observed relative to last month. However, most business is occurring at prices clustered around the listings or contained within the ranges.

Genuine MahoganyThe number of North American companies importing Gen-uine Mahogany has steadily contracted over time and is now quite limited. Some of the remaining market partic-ipants have decent ongoing business in the architectur-al millwork, furniture, and flooring sectors, but most are struggling to maintain even modest sales volumes. Almost two-thirds of surveyed importers and distribution yards in-dicate Genuine Mahogany demand declined during the last 30 days. Prices observed in the marketplace are generally soft, as evidenced by reductions to the all the published figures except the high side of the 4/4 range.

SapeleMarket momentum for Sapele remains quite good in North America. Importers and distributors are enjoying brisk sales to commercial millwork, residential moulding, and door manufacturers. In fact, distribution yards are more willing to build inventories of Sapele than most other trop-

ical species because many have experienced shortages or outages of given Sapele items this year. Importantly, Sapele is popular in several international markets from Europe to the Far East. In addition, port congestion in West Africa consistently delays shipments to North America. Amid these circumstances, importers are still struggling to bring Sapele inventories to desired levels. Sapele prices are gen-erally firm, though last month’s increases have the listings and ranges in order.

European BeechThe last 30 days brought little change in market direction for European Beech. Longtime buyers in the distribution yard and cabinet sectors are consistently purchasing the species, with business still concentrated heavily in the West and Midwest. Contacts indicate European Beech comprises a small and generally static share of the overall hardwood market in the eastern half of the US.

European White OakWhile specific market information is difficult to obtain, it is evident that European White Oak has a solid niche in high-end US residential flooring markets. An expanding number of flooring manufacturers and distributors now have exten-sive European White Oak product offerings. In addition, US imports of White Oak lumber from Europe are at record levels and increasing.

Baltic/Russian/Chinese BirchNorth American market circumstances for Baltic/Russian/Chinese Birch are unfavorable at this time. Specifically, domestic whitewoods like Yellow Birch, Hard Maple, and Soft Maple are generally abundant and somewhat soft in price. As such, demand for Baltic/Russian/Chinese Birch remains very low.

Trade DataUS imports of tropical hardwood lumber totaled 7.0 million board feet (MMBF) this August as compared to 9.0 MMBF in August 2017, according to the US International Trade Commission. Three species accounted for most of the de-cline: Balsa (-1.1 MMBF), Sapele (-431 MBF), and Keru-ing (-398 MBF). Also, Genuine Mahogany imports were down 242 MBF. Conversely, Ipé, Spanish Cedar, and Vi-rola/Imbuia shipments each increased more than 100 MBF. On a year-to-date basis, six of the 10 most imported tropi-cal species registered decreases through August, including Sapele, African Mahogany, and Genuine Mahogany.

Year-to-date tropical hardwood lumber imports from South

"Market momentum for Sapele remains quite good in North America."

8




shipped in August 2017. Total White Oak imports from Eu-rope through August shattered the full-year record set in 2017 and are on pace to reach 9.9 MMBF for the year (see graph on page 7).

Detailed tables on US imports of hardwood lumber by species and country are on page 2.

USITC Code ChangesIn early October, the US International Trade Commission issued revisions to the Harmonized Tariff Schedule. Revi-sions were made to several sections of Chapter 44, which governs a range of lumber, wood flooring, and wood panel products. Most of the changes were made to allow for dif-ferentiation between coniferous and non-coniferous prod-ucts; the hardwood lumber codes did not change. The new codes took effect on October 1. For more information, visit https://hts.usitc.gov/current or contact the International Wood Products Association (www.iwpawood.org).

America were off 16% through August to the slowest pace in five years; African volume was down 21% to the slowest pace in nine years; and receipts from Asia/Oceania were up 11% (see graph on page 4). During the same period, imports from Central America declined 47%, largely the result of plunging shipments from Guatemala (see graph on page 6).

US imports of temperate hardwood lumber were 12% higher this August than last, at 9.4 MMBF. Another strong month of Beech imports lifted year-to-date volume into a statistical tie with the record 2017 pace. The US imported 2.6 MMBF of White Oak from Europe in August, the high-est one-month total on record and four times the quantity

780 Ridge Lake Blvd., Ste 102, Memphis, TN 38120-9426Phone: 901-767-9126 ~ Fax: 901-767-7534

Email: [email protected]

"The US imported 2.6 MMBF of White Oak from Europe in August, the high-est one-month total on record ..."

9

https://hts.usitc.gov/current

http://www.iwpawood.org

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