How Demand for Products in China that are Manufactured with American Red Oak May Affect Your Business

March 1, 2018

The Government banning the harvest of timber in China, coupled with a huge increase in demand for products manufactured from American hardwoods, has placed a strain on the availability of logs for US sawmills. Demand increases outpaced production increases in 2017 and that gap will likely widen this year, even though quite a few producers are adding drying and processing capacity.

The limiting factor in 2018 will not be mill capacity, but rather, the economic availability of Red Oak logs will determine how much lumber is produced relative to how much of the resource is exported in log form.  There is no shortage of Red Oak timber in the woods.  There is an extreme shortage of loggers to harvest this timber. However, if 2017 repeats, competitive pricing pressure will make that timber too expensive for more and more mills to saw at a profit.

Because Red Oak lumber demand will rise faster than production, prevailing lumber prices should continue to rise in 2018.  There will be growing tensions, between green producers, who need higher prices to compensate for log price increases (especially with so many logs being exported) and their customers, especially in China. The bottom line is as more and more hardwood logs are exported from the US to help meet the rising demand for lumber in China, you will experience continually increasing prices.

This information has been provided by Dan Meyer, Editor, and our friends the Barrett Family of the Weekly Hardwood Review, January 12, 2018.

Since 1929, the WPMA has focused our efforts to assist our members to be profitable and competitive in the global marketplace.

For more information contact:  Philip Bibeau, Executive Director at 978/874-5445.

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