Issue link: http://palletcentral.uberflip.com/i/1009631
28 PalletCentral • July-August 2018 palletcentral.com and U.S. duties on Canadian lumber are likely to remain in place until they do. What Goes Up… Turning to the future, hardwood raw material availability for the pallet industry is likely to seasonally improve this summer. Log supplies at hardwood sawmills began to rebound in late spring, as did lumber production. Assuming this trend continues, increased pallet lumber and cant receipts will be welcomed by pallet manufacturers, many of which have seen sales limited more by raw material supplies – both hardwood and softwood – than by demand. That said, it will probably take some time to fully close the gap between supply and demand, especially with tight availability and high prices for softwoods keeping pallet manufacturers more reliant on hardwoods than in recent years. Is the hardwood industry still capable of oversupplying pallet markets when weather and other conditions are right? Absolutely. Will it do so at any time in 2018? It seems doubtful. Therefore, in the near- term, buyers are unlikely to see relief from today's relatively high hardwood pallet lumber and cant prices. Looking into Q1 2019 and beyond, the outlook is less clear. The current situation looks similar to the circumstances that eventually triggered the last crash in demand and prices for hardwood pallet materials. Specifically, competition from other markets seeking similar quality material is elevated; supplies are persistently scarce; and prices are quite high from a historic standpoint. Plus, history shows that all the factors influencing pallet industry demand for hardwoods – including economic growth and softwood lumber prices – follow cyclical patterns and are subject to sudden changes. The pallet industry 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. Large swings in demand and prices for hardwoods and softwoods over the last five years would seem to prove that the only constant in the pallet raw material marketplace is change. What goes up almost inevitably comes down. The only question is when. PC MARKET Hardwood Market Report (HMR) has provided weekly price and market information on North American hardwood lumber and lumber products continually since 1922. Recognized as the authoritative source of data and market analysis, HMR is circu- lated throughout the world in print and via Internet at www.hmr.com. For more information, email: David Caldwell, Associate Editor, at david@hmr.com; Judd Johnson, Editor, at judd@hmr.com; Andy Johnson, Associate Editor, at andy@hmr.com.