Issue link: http://palletcentral.uberflip.com/i/1280561
PalletCentral • July-August 2020 21 The last two-and-a-half years have not been kind to the U.S. hardwood industry. Sawmills were reeling before the coronavirus hit and are now in even tougher shape. production that could alter the supply/demand balance for pallet cants and lumber during the remainder of 2020. Unsettling Times for Hardwood The last two-and-a-half years have not been kind to the U.S. hardwood industry. Sawmills were reeling before the coronavirus hit and are now in even tougher shape. First came the sharp decline in demand from China. This resulted from an economic slowdown as well as changing home construction practices whereby Chinese builders rather than homeowners select interior furnishings and fittings. (Chinese home builders – like their U.S. counterparts – tend to migrate away from solid hardwood toward lower-cost materials.) Then came the trade war with China, during which China imposed import tariffs of up to 25 percent on U.S. hardwood logs and lumber in response to similar measures by the U.S. This not only further reduced exports to China but also pushed down prices, as exporters were compelled to shoulder at least half the tariff costs. This year, U.S. hardwood exports have declined both to countries hard hit by coronavirus and to countries supplying finished goods to those markets, such as Vietnam. Shipments to Mexico have been doubly impacted by declining U.S. imports of Mexican finished goods and reduced consumption in Mexico as the coronavirus spread there. What is the net result? U.S. exports of hardwood lumber are on pace to total just 1.180 billion board feet (BBF) in 2020 – down 195 million board feet (MMBF) from last year and 705 MMBF from the record high of 2017. Shipments to China are pacing 558 MMBF lower this year than in 2017, accounting for 79 percent of the total three-year decline. As exports were faltering, U.S. hardwoods also encountered heavier competition in domestic markets from substitute products and imports. Luxury vinyl tile gained significant market share at the expense of other floor coverings, including hardwood flooring. The popularity of painted cabinets allowed cabinet manufacturers to replace hardwoods with wood composites and other materials in those applications. Imports of wood cabinets spiked. And on it went.