| Lumber and Wooden Boards Lumber prices are soft, both from a
year-over-year perspective and a longer-term six-year perspective. However, taking a
shorter-term view - either the past month or since the beginning of this year - prices
have shown some modest signs of revival. This is in line with the overall economic
performance in the United States. After a recession during the second half of 2001, the
economy appears to be experiencing a recovery, albeit at a slower rate than initially
expected.
With the exception of imported woods, rough sawn lumber and veneer are the only
products which saw their prices advance between July 2001 and July 2002. However, the
advance was very modest amounting to only 0.2 percent. The price change January 1996 is
hardly any more impressive, being below ten percent. Prices of higher value-added lumber
products - such as dressed lumber and dimension lumber - as well as engineered panels -
such as plywood, particleboard and MDF - declined compared to July 2001. In relation to
January 1996, panel prices are moderately higher, except for particleboard and MDF, whose
prices are almost ten percent lower. It seems, however, that the low point has been
surpassed and since last March, prices of particleboard and MDF have started to firm
slightly.
Prices of imported lumber continue their upward trend. The cause must be found in a
general supply shortage and the weakness of the American dollar.
Demand, supply and price movements vary significantly between different species,
quality grades, drying levels, and growing regions. Below, we are listing the price
changes during the past month of several widely used species. (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).
Generally, green lumber is in shorter supply than kiln-dried lumber and therefore green
lumber prices are on a modest upward trend, while prices of kiln-dried lumber are soft.
Also, prices in the northern growing regions and in the Appalachian mountains seem to be
stronger than prices in the Southern United States. For instance, green Cherry lumber from
the Appalachians advanced by almost 4 percent during the month of August. No other product
monitored by us - including imported lumber - advanced to the same extent. Similarly, Hard
Maple prices went up by 1.1 percent during the same month. On the other hand, kiln-dried
Cherry fell by 0.6 percent and kiln-dried Hard Maple prices remained stable. Cherry wood
belongs to the most sought-after species by furniture and cabinet manufacturers and prices
for 1000 board feet of KD lumber are well in excess of US$3000.00. In fact Cherry prices
are fast approaching the prices fetched by genuine Mahogany.
In contrast to Cherry and Hard Maple, several other products saw their prices decline.
This applies in particular to kiln dried Red Oak from Southern sawmills. Prices dropped by
1.5 percent in August and are now averaging only US$ 1300 for 1000 board feet of top
quality lumber. Considering, that Oak and Cherry have similar properties, and modern
finishing methods allows Oak to get a Cherry-like appearance, it is surprising that there
is a price difference of almost US$1500 (or some 100 percent) between these two species.
Concerns about the environment and the sustainability of tropical
forests have led to supply shortages of Mahogany - and in its wake - rising prices. A
thousand board feet of kiln dried Mahogany lumber now costs approximately US$3600 at the
US West coast. However, the price advances during the spring and early summer have come to
a halt and prices are at the same level as one month ago.
Imported Lumber
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| S.American Mahogany |
.gif) |
KD |
US$3600 |
No Change |
|
AD |
US$3095 |
No Change |
|
| African Mahogany |
|
KD |
US$2100 |
No Change |
| Red Oak |
| Northern Region |
KD |
US$1675 |
US$15 |
|
AD |
US$1335 |
US$10 |
| Southern Region |
KD |
US$1305 |
US$20 |
|
AD |
US$1000 |
No Change |
| Appalachians |
KD |
US$1513 |
No Change |
|
AD |
US$1168 |
No Change |
| White Oak |
| Northern Region |
KD |
US$1205 |
No Change |
|
AD |
US$775 |
US$5 |
| Southern Region |
KD |
US$1040 |
US$10 |
|
AD |
US$800 |
US$10 |
| Appalachians |
KD |
US$1235 |
US$5 |
|
AD |
US$880 |
No Change |
| Cherry |
|
|
|
| Appalachians |
KD |
US$3100 |
US$20 |
|
AD |
US$2508 |
US$93 |
| Hard Maple |
| Northern Region |
KD |
US$2145 |
No Change |
|
AD |
US$1785 |
US$20 |
| Appalachians |
KD |
US$1960 |
US$5 |
|
AD |
US$1575 |
No Change |
| Soft Maple |
| Northern Region |
KD |
US$1435 |
US$20 |
|
AD |
US$1025 |
US$10 |
| Appalachian |
KD |
US$1435 |
US$5 |
|
AD |
US$1115 |
No Change |
| Walnut |
| Appalachians |
KD |
US$2295 |
US$15 |
|
AD |
US$1705 |
No Change |
Parallel to the sagging prices of lumber, prices for engineered panels also lost
ground. Prices for particleboad and MDF are now ten percent lower than in January 1996 and
about one percent lower than in July 2001. In view of the sluggish economy and industrial
over-capacity, the price erosion continues and may not come to an end until sometime in
2003. Plywood fared somewhat better, as the price decline was minimal over the past year
and during the past six years, prices advanced by six percent.
Secondary Wood Products
In contrast to the generally weak prices for North American lumber, prices of
semi-finished and finished wood products did not fall to the same extent, and for many
items prices even increased. The strongest price erosion occurred for windows and doors,
the result of slowing residential housing construction. However doors experienced very
modest price advances in the longer-term. Prices today are only 4.5 percent higher than in
1996. This is not surprising, as door manufacturers are switching increasingly to hollow
doors, using less expensive MDF skins.
At the "strong end" of the spectrum are cabinets, headboards for beds and
office desks, all of which experienced price advances of 3 percent or more during the past
twelve months. In fact prices are at or near an all-time record. On a long-term
perspective, prices of these products also experienced above average advances, of between
13 and 19 percent. The strong showing of cabinets and headboards is a reflection of the
upbeat consumer confidence. On the other hand, the price-strength of desks is surprising
in light of the poor profitability and investment apathy of American companies.
In view of the generally stronger prices of secondary wood products in comparison to
their raw-materials, Analysts conclude that manufacturers of such products were able to
maintain their profit margins (expressed on the basis of sales). However, as sales volumes
are suffering in the current economic climate, the profitability (on the basis of assets)
of many secondary wood products manufacturers is less than satisfactory. Of course, the
situation varies greatly depending on the products being produced and the raw-materials
being used. For instance, manufacturers using mostly particleboard and MDF face an
entirely different situation compared with manufacturers using mainly solid Mahogany wood.
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