Issue link: http://palletcentral.uberflip.com/i/507696
26 PalletCentral • March-April 2015 palletcentral.com Since mid-October, prices for pallet cants and pallet lumber have hardly budged. Pallet manufacturers now have larger cant and lumber inventories, but few have been able to push down prices since they are still low relative to other industrial products. Frame stock prices have fallen 5% since mid-October on top of sizeable drops earlier in 2014. Upholstered furniture production has increased, but frame stock supplies have increased faster. Industrial Market Outlooks In a relatively short time, several key markets for the center of the log have gone from boom to bust, and even markets that remain healthy are now seeing big supply bumps. Since the markets that slowed in the last four months are unlikely to recover in the months ahead, most industrial products will see additional downward price pressure. However, pallet stock may be an exception. Pallet Stock Pallet sales are gradually expanding in parallel with the economy, keeping cant and pallet lumber supplies from getting way out ahead of demand. Producing pallet stock is still not an attractive proposition for sawmills— all things being equal— since it sells for several hundred dollars less than most industrial products. As such, most pallet manufacturers won't be able to lower cant and pallet lumber prices to any great extent unless all other markets fill up. Railroad Ties RTA's most recent forecast has new wood crosstie purchases rising from 24.9 million in 2014 to 26.4 million in 2015. Although the forecast was issued just prior to the collapse in oil prices, we expect that collapse to have little net impact on infrastructure spending by railroads, which is generally done with an eye toward the long term. Tie supplies are rising and markets for mats and board road are faltering, however, which will allow tie buyers to reduce prices somewhat. Mats and Board Road New oilfield activity will remain slow into fall, as will markets for mats and board road. Global demand for oil is still rising, however, and the Energy Information Administration forecasts that crude prices will gradually rebound to an average of $60 per barrel for the year and $75 in 2016. U.S. oil production is expected to pick back up in the fall, as should demand for mats and board road. PC MARKETS Four-month price trends for selected industrial lumber items averaged across all regions (Weekly Hardwood Review). Based in Charlotte, North Carolina, Andy Johnson is regional editor of the Hardwood Publishing Company. He can be reached at andy@hardwoodreview.com or phone 704-543-4408.