Issue link: http://palletcentral.uberflip.com/i/1009631
palletcentral.com PalletCentral • July-August 2018 27 became a much better market option for softwood sellers than the pallet market. All told, sales of hardwood pallet lumber and cants were much stronger during the second half of 2017 than during the first half, and cant prices quickly increased. Challenging Supply Circumstances For hardwood sawmills, strong pallet lumber and cant business has carried over into 2018 and gained additional momentum through June. The economy continues to expand at a healthy rate, pallet manufacturers report solid year-over-year sales growth, and supply and price circumstances for softwoods have become even more favorable for hardwoods. At the same time, demand has strengthened from other markets that use raw materials generated from hardwood log centers, particularly the residential flooring, truck trailer flooring, and railroad tie industries. Through mid-year, supplies of all these items were lagging demand, and each market appears to have strong forward momentum. Moreover, unusually wet winter and early spring weather in most hardwood producing regions impacted logging and hardwood sawmill production. According to HMR© estimates, the annualized pace of U.S. hardwood lumber production through the first five months of 2018 was 3% below 2017 production. Amid these market conditions, hardwood pallet lumber and cant supplies tightened dramatically in most areas during the first half of 2018, and prices responded. On average, hardwood cant prices climbed 12% during the first half of 2018 for a total increase of 26% for the one-year period ending on June 22, 2018. However, pallet manufacturers are still struggling to procure sufficient volumes of cants, even those paying high prices. And, prices continue to show signs of upward pressure. Meanwhile, prices for U.S. and Canadian softwood lumber continued to climb during the first half of 2018, as evidenced by the Random Lengths Framing Lumber Composite Price and scores of other published Random Lengths lumber prices repeatedly setting all-time highs. U.S. and Canadian officials appear to be making no headway in forging a new softwood lumber agreement, The pallet industr y is tolerating higher raw material prices now because it has little choice, but few markets are as sensitive to raw material costs in the long run. If circumstances change, pallet consumers, and therefore pallet manufacturers, will quickly migrate to the lowest-cost raw material available. 123rf.com