November-December 2015

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26 PalletCentral • November-December 2015 he balance between hardwood supply and demand changed dramatically in the twelve months ending in mid-2015, as mill production increased, exports slipped, and demand for crane mats and board road slowed. Pallet manufacturers, tie treating plants and flooring manufacturers that had faced severe raw material shortages as late as the fall of 2014 were flush with lumber by the summer of 2015. Most low-grade markets remain amply supplied today. Following are overviews of recent supply and demand trends for each of the major low-grade sectors. Pallets Pallet sales in the eastern U.S. have trended slightly higher in 2015, according to the vast majority of manufacturers surveyed from the Gulf Coast to the Upper Midwest to the Northeast. "Most pallet manufacturers are doing well," commented one large producer, and another said, "We have seen healthy demand all year." While pallet sales are fairly good throughout the East, hardwood raw material supplies vary widely within the eastern producing regions. Pallet plants from Virginia and West Virginia up through Pennsylvania are flush with pallet cants and cut stock, and are receiving more offers from sawmills than they can accept. "The cant market is clearly oversupplied," explained one sawmill sales manager. Flooring manufacturers in the region remain conservative with lumber purchases, putting little additional pressure on low-grade supply. Cants and cut stock are also abundant in the Upper Midwest, partly because Northern forests yield fewer long logs from which to cut other industrial items like mat timbers. The supply picture is entirely different in the South. Pallet cant and cut stock availability — which increased in spring and early summer when flooring-grade lumber was moving slowly — retightened in July/August as flooring plant purchases rebounded in the region. Heavy rains in early fall further reduced supplies in Georgia and the Carolinas and left some pallet manufacturers scrambling for material and paying higher prices. Importantly, many pallet manufacturers became more reliant on pine when hardwood raw material became scarce and more expensive in 2013-2014, and intend to stay away from hardwood unless prices fall back to pre-2013 levels. This is especially true in the South. Railroad Ties In the last year, many hardwood sawmills revamped existing production lines or installed small tie mills in order to boost tie output. Many also transitioned to tree-length logging to control log lengths and maximize production of 8'6" crossties. Weakness in crane mat and board road markets also stimulated tie production. Not surprisingly, year-to-date wood crosstie production was up 33% during the first eight months of 2015, according to the Railway Tie Association (RTA). Industry purchases of crossties increased 6% during the same Low-Grade Hardwood Markets Amply Supplied By Andy Johnson MARKETS T

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