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Industry News & Markets |
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Recent Price Movements in American Primary and Secondary Hardwood Markets¡¾Jan.31, 2002¡¿ |
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| ¡¡ Recent Price Movements in American Primary and Secondary Hardwood Markets Overall, prices of domestic lumber products and wood based panels are weak, prices of premium imported woods continue to rise steeply, and prices of finished and semi-finished wooden products are moving moderately upwards. Most industries using hardwoods, such as furniture, cabinet, flooring and moulding manufacturers are suffering from both the current economic slowdown in North America and the fierce competition from foreign imports. Manufacturers of Mahogany furniture are also hurting due to the widening price discrepancy of Mahogany lumber prices and finished products. Historically, the relative prices increase of finished Mahogany furniture has been much less than the increase of Mahogany lumber. On the other hand, manufacturers working predominantly with particleboard and plywood are in a better position as they are benefiting from falling prices of such boards. Lumber Lumber prices for most US species have been tumbling throughout last year. The price index of rough lumber fell from 117.0 at the beginning of 2001 to 108.2 in November, representing a drop of 8.0 percent. Over a six-year historic time span, rough lumber is now only 8.2 percent more expensive. The price decline for primary wooden products with a higher value-added started later than for rough lumber, and the year-on-year drop was less pronounced. This is not surprising. Until mid-2001 the labour market was still healthy and wages were on the increase. Thereafter, however, the employment situation deteriorated noticeably and wage rates started to stagnate. As with rough lumber, today's prices for most processed primary-wood-products are only marginally higher than six years ago. Prices of dressed lumber, which contain a higher labour component than rough lumber, remained stable on a year-over-year basis. However, price advances during the latter part of 2000 and the first half of 2001 have been given back by the subsequent price erosion. Likewise, prices for dimension lumber fell by only 1.2 percent over the course of the past twelve months. While rising throughout the year 2000 and reaching a peak in January of 2001, they started a decline thereafter with only short and sporadic interruptions. In line with other value-added primary wood products, veneer prices have also declined since April 2001. The year-on-year drop amounted to 2.7 percent. Demand, supply and price movements vary significantly between different species, quality grades, drying levels, and growing regions. Below, we are listing the price changes of several widely used species during the past month. (Note that the following comments and data refer to 1000 Board Feet (MBF) of top-quality lumber, 1" thick. Imported lumber is quoted at dockside West Coast port of entry. Approximately $ 50.00 to $ 55.00 will have to be added for East Coast ports.) In Contrast to domestic North American species, premium tropical woods continue along their long-established price assent. However, the rate of increase has flattened a bit in recent months. Above all, Genuine Mahogany is now sold in excess of US$ 3500 for 1000 board feet of kiln dried lumber, 1" thick. During the past twelve months prices advanced by almost ten percent and by 0.6% during December alone. Presently, the wood is quoted 42 percent higher than at the beginning of 1996. In fact, the species is now standing at an all time high in North America. This is quite remarkable, considering the high value of the American dollar which - theoretically - should act as an impediment to imports and price escalations. African Mahogany serves sometimes as a substitute species for Genuine Mahogany, but the wood is much less popular. In spite of its price advantage - it is quoted at $2030 or at a 42 percent discount compared to Genuine Mahogany - African Mahogany is not much used in North America. Prices have been moderately declining during the past few months. Generally, prices of kiln dried lumber are depressed, while those of green lumber are still rising, above all in the Appalachian growing regions. For instance, during the month of December, KD White Oak prices in the Appalachian fell by 1.4 percent but green prices advanced by 3.1 percent. Similarly, KD Hard Maple dropped by 0.5 percent but the green variety rose by 3.8 percent. Obviously, once inventories of KD lumber are reduced, the strong showing of green lumber must ultimately show up in the KD market. From a regional point of view a rather peculiar pattern can be seen. For KD lumber, prices are strongest in the North and weakest in the Appalachian region. The exact opposite is the case for green lumber. Prices are strongest in the Appalachian and weakest in the Northern region. Price movements in the Southern Region lie between the two extremes of the Northern and Appalachian regions, but southern prices are generally much lower than elsewhere. For instance, 1000 Board Feet of KD Red Oak (top-quality lumber, 1" thick) costs $ 1635 in the North but only $ 1290 in the South. This price difference of over 20 percent is more than what the quality difference between southern and northern lumber justifies. Tropical Species
Engineered Wooden Boards Plywood and particleboard are suffering under the same economic influences as lumber. The demand is soft and prices have been on the decline for over twelve months. Nevertheless, the fairly resilient construction sector has been offering some support to these products. Prices for plywood are 2.9 percent lower and those for particleboard are 5.5 percent lower than one year ago, but this decline is less pronounced than the 8 percent decline for solid lumber. The situation is different over a longer time span, during the past 6 years lumber prices advanced by 8.2 percent but plywood prices went up by only 3.8 percent and particleboard prices even fell by ten percent! Even though the price premium of Medium Density Fiberboard (MDF) in relation to particleboard has widened considerably, MDF is nevertheless emerging as the more advantageous product for many applications. MDF is gaining in popularity among manufacturers of furniture and cabinets, mouldings and millwork, and laminated flooring. As a result of these shifts, MDF prices weathered the economic downturn much better than plywood and particleboard.MDF prices continued to rise until August of 2001, even though prices of other engineered boards (and lumber) had already entered a declining phase. MDF prices were further supported by the gradual disappearance of the industry's chronic over-capacity. In September 2001, the economic reality has caught up with MDF and prices started to decline in unison with most other products. Nevertheless, MDF is still quoted 4.5% higher than one year ago. However, in comparison to January 1996, MDF prices are still some ten percent deeper at the present time. Finished and Semi-finished Wooden Products The economic slowdown in the US has been induced by sluggish business investment. Residential construction and consumer spending has been more resilient and it is therefore not surprising that prices of building products and consumer goods did not decline noticeably. This may change in the month to come as consumer confidence is now also showing some strains. Among the wooden building products being monitored, prices of windows and mouldings advanced by slightly less than four percent during the past twelve months. In fact, their prices are now standing at a peak. The price increase between January 1996 and January 2002 amounted to about twelve percent. The strength of the windows market is at least partially based on people's heightened desire to conserve energy at times of rising fuel costs. The price rises for wooden doors came to an end in March of 2001. The subsequent decline had the result that doors are now quoted one percent below the prices of one year ago, but they are still 4.5 percent more expensive than in January of 1996. All wooden consumer products in the MIS "basket" saw their prices advance during the past year with the exception of wooden frames for upholstered seats. Frames are now 3.4 percent less expensive that one year ago and only 8.9 percent more expensive than six years ago. The price weakness of frames is partially due to the ongoing substitution of solid lumber with less expensive plywood. The recent price advance for some consumer products was quite steep, above all for
chairs and bedroom dressers, with increases of 3.4 percent and 2.1 percent respectively
during the past year. Both products' prices are now standing at a culmination point or
more than ten percent higher than in January of 1996. |
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