Issue link: http://palletcentral.uberflip.com/i/1280561
PalletCentral • July-August 2020 23 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. of sawmills to sell industrial/pallet quality material affects how much total lumber they can produce. This is evident in production statistics. In 2019, Eastern U.S. hardwood production declined by 588 MMBF, or about 7 percent, as strength in the pallet/container sector and other industrial markets mitigated the impact of declining domestic and international demand for grade lumber. However, since the coronavirus broadly curtailed demand across both grade and industrial markets, most sawmills have slashed production, some have closed, and others are on the brink. The annualized pace of production through July was 6.070 BBF – a 20 percent drop from last year. Fewer hardwood sawmills are operating now than at this time last year and even at the start of 2020. Advertised sawmill auctions have skyrocketed since the start of spring, signaling more closures are imminent. Some of these facilities will be purchased and put back into service, but not all of them – which is the point. As happened with the Great Recession, all of the headwinds hardwoods have faced the last two years combined with the 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 circulated throughout the world in print and via the 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. coronavirus pandemic are reducing U.S. hardwood manufacturing capacity, not just capacity utilization. Certainly, new capacity can be added. But, that will only happen if the marketplace requires more volume and is willing to provide investors incentives to do so. In the meantime, what happens to supply? One possibility is an overcorrection that drops supply well below demand for a period of time later this year. Hardwood raw material for pallet and container manufacturers is abundant now, but that could change if that possibility becomes reality.