palletcentral

May-June-2017

Issue link: http://palletcentral.uberflip.com/i/842358

Contents of this Issue

Navigation

Page 21 of 43

22 PalletCentral • May-June 2017 palletcentral.com The Hardwood Slump allet industry consumption of hardwood raw material trended down for the second straight year in 2016. High prices for hardwood relative to softwood drove pallet manufacturers away from the former and toward the latter, as did increased emphases on uniform appearance and mitigating mold risks. Hardwood Market Report estimates that U.S. pallet manufacturers reduced hardwood pallet lumber and cant purchase volumes 3% in 2015 and another 9% in 2016 to 3.265 billion board feet. By some estimates, softwood comprised over 50% of the industry's total wood raw material usage last year. The impacts to hardwood producers varied from place to place. Pallet cant prices – averaged across all regions – plunged 9% in 2016 following a 7% decrease the previous year. Sawmills were hit with much larger cumulative 2015-2016 declines in the Appalachian and Northern regions (both -20%) than in the South (-4%). Despite the difficulties hardwood suppliers encountered during the last two years, the pallet industry remains the largest volume domestic or international market for hardwood, by far. And, it appears prospects are improving for hardwood suppliers. Pallet Production Trending Up The U.S. lacks consistent data on trends in wood pallet production. Some analysts use industry employment trends to estimate production trends, but increasing automation is weakening that correlation. In reality, the overall performance of the economy is the best available indicator of trends in wood pallet production since (1) myriad products in almost every sector of the economy are transported on pallets; (2) the average volume of raw material used per wood pallet is reportedly static; and (3) most industry observers indicate no appreciably change in the percentage of pallets made from wood. The U.S. pallet production and total wood usage will bump up alongside overall economic growth this year, but how much will that be? While the Department of Commerce's first estimate for Q1 2017 GDP growth was just 0.7%, that figure is subject to revision and is probably not representative of how well the economy, or the pallet sector, will perform for the full year. Economists at the International P MARKETS iStockphoto.com/tiero Out of the Doghouse? Pallet Industry Growth Could Benefit Hardwood Suppliers By Hardwood Market Report

Articles in this issue

Links on this page

view archives of palletcentral - May-June-2017