Issue link: http://palletcentral.uberflip.com/i/921113
26 PalletCentral • November-December 2017 palletcentral.com forecasted an 8.3% decline in new wood crosstie demand to 22.56 million in 2017. That equates to slightly over one billion board feet of hardwood consumption. However, it would not be surprising to see actual consumption exceed that figure due to improved purchasing in the second half of the year. Looking ahead to 2018, RTA forecasts a 3.3% rise in demand over 2017 to 23.52 million crossties. The hardwood industry should be able to meet this anticipated uptick in demand. Board Road and Crane Mats Markets for these products have been treading water the last couple of years. New energy and transportation infrastructure projects that require board road and crane mats have been started, but not enough to meaningfully change overall demand. Supplies of board road and crane mats were elevated at the start of 2017. Availability has moderated since mid-year due to the usual summer uptick in usage and healthier markets for crossties absorbing more raw material. Not long ago, energy industry analysts said drilling for oil was only profitable when crude oil prices were above $70, $80, or even $90 per barrel ($/b). Crude has been below $60/b per barrel since mid-2015 (source: Energy Information Administration), yet oil companies have returned to profitability by streamlining operations and adopting new technology. Various industry analysts say the breakeven threshold is now anywhere from $40 to $55/b. For natural gas, the threshold is reportedly in the $3 to $4 per million Btu ($/MMBtu) range. In 2017, crude oil and natural gas prices have stayed near $50/b and $3/MMBtu, respectively – high enough to sustain existing drilling and fracking operations but not high MARKETS Hardwood suppliers are enjoying better cant business than earlier in the year, but histor y shows such improvements can be fleeting. Pallet manufacturers have ver y slim margins and will continue to seek out the lowest-cost raw materials available.