prepared for ahmi - appalachian...
TRANSCRIPT
US Hardwood Market Trends
Prepared for AHMI July 30, 2018
Presented by David Caldwell
HMR
Memphis, Tennessee
USA Voice: (901)767-9126 Email: [email protected]
US Hardwood Market Trends
Prepared for AHMI July 30, 2018
Presented by David Caldwell
HMR
Memphis, Tennessee
USA Voice: (901)767-9126 Email: [email protected]
1928 – Formation of AHMI
Mid-1930s
Extended
membership
beyond
lumber
producers
1945 – Forestry Division established
to include non-operating timberland
owners
1946 to current educating end users
about the beauty and benefits of
Appalachian hardwoods
1960 – Forestry
Division
constructed
demonstration and
research facility
Mid-1960s Oak
promotion
1960s
International
marketing
campaign
Mid-1980s Yellow
Poplar promotion
Early 1990s – Character-marked
hardwoods
1994 Community
Involvement program
1995 – AHMI first internet site
Late 1990s The
Height of Beauty
2002 – Demand the Appalachian
Standard
2007 – Appalachian
Hardwood Verified
Sustainable program
2012 – Verified Legal
program
2017 – Certified
Appalachian
A Rich History
What Does HMR Do With All That Data?
• The process begins with you providing information
What Does HMR Do With All That Data?
• The process begins with you providing information
• What types or forms of information are preferred?
o Documented transactions
o Survey forms
o Phone conversations
o Emails
o Faxes
o Other correspondence delivered by US mail, private
delivery services, carrier pigeons, etc.; …
What Does HMR Do With All That Data? • The process begins with you providing information
• What types or forms of information are preferred?
• Our procedures
o Documents received
o Data input into our price report program
o Price reports published weekly for each member of
editorial staff to use for analysis
What Does HMR Do With All That Data? • The process begins with you providing information
• What types or forms of information are preferred?
• Our procedures
• Analysis
Identify the mode and prevailing range of prices
Track change in prices from same sources and/or
buyers
Pursue more information as needed to verify
irregularities
What Does HMR Do With All That Data? • The process begins with you providing information
• What types or forms of information are preferred?
• Our procedures
• Analysis
• Conclusions
o Analysis and price change recommendations are done
individually by each member of the editorial staff
o Collectively, editorial staff discusses each item by
region to determine if change is warranted
o Our goal for price change is consensus but consensus is
not required
US Economic Activity
GDP increased at an annual rate
of 2.5% in 2017 and is projected
to grow 2.7% in 2018 and 2.5% in
2019.
US Economic Activity GDP increased at an annual rate of 2.5% in
2017 and is projected to grow 2.7% in 2018
and 2.5% in 2019.
Consumer Confidence is near a
17 year high.
US Economic Activity
GDP increased at an annual rate of
2.5% in 2017 and is projected to grow
2.7% in 2018 and 2.5% in 2019.
Consumer Confidence is near a 17
year high.
Unemployment is 4.0%.
0
500
1,000
1,500
2,000
2,500
Th
ou
sa
nd
Un
its
US Housing Start Cycles
Total Starts Single-Family Starts
Prior to 2015, the longest up or down trend
for total starts in a cycle had been 5 years.
2018 is the ninth
consecutive year of
total housing start
gains.
Source: US Census Bureau
Graph: HMR
2018 is the seventh
consecutive year
of single-family
start increases.
*Annualized
250
450
650
850
1,050
1,250
1,450
1,650
1,850
2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018 **2019
Th
ou
san
d U
nit
s
US Housing Starts with Projections Through 2019
Sources: US Census Bureau and NAHB Graph: HMR
**Forecast
Housing starts rose 141.0%
from 2009 to 2018 but are
projected to contract 2.3% in
2019
1,434,700 units (average since 1959)
*Projection based on Jan. - May
300
400
500
600
700
800
900
1,000
1,100
2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018 **2019
Th
ou
san
d U
nit
s
US Single-Family Housing Starts
with Projections through 2019
Sources: US Census Bureau and NAHB Graph: HMR
Single-family housing starts
increased 109.6% from 2009 to
2018 and are expected to rise
2.8% in 2019.
**Forecast
1,018,700 units (average since 1959)
*Projection based on Jan. - May
Pallets
Furniture
Exports
Millwork
Cabinets
Flooring
Railway Ties
Board Road/Mat Timbers
2018
36.7%
5.0%
22.1%
5.3%
5.2%
9.3%
12.2% 4.2%
© 2018 HMR
2018 Hardwood Consumption
46.9% 53.1% Grade Lumber
Pallet Lumber,
Cants, Ties,
Board Road/Mat
Timbers
Industrial Products: 4.682B Bd. Ft.
Grade Lumber: 4.128B Bd. Ft.
Total: 8.810B Bd. Ft.
© 2018 HMR
200
300
400
500
600
700
800
900
Furniture Moulding/Millwork Cabinets Flooring
Millio
n B
oard
Feet
Consumption of Hardwood Lumber by US Domestic Grade Markets
2017 2018
Sources: Private, Government, and HMR Graph: HMR
+1.9-0.8% -0.4%
+1.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018
Flooring 0.59 0.51 0.55 0.753 0.747 0.731 0.776 0.813 0.821
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
2010 2011 2012 2013 2014 2015 2016 2017 2018
Billio
n B
oard
Feet
2010 to 2018 +39.2%
2017 to 2018 +1.0%
© 2018 HMR
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018
US Solid Wood Flooring Shipments and Single-Family Housing Starts
Flooring
SF Starts
Sources: US Census Bureau and HMR
Graph: HMR
Hardwood lumber consumption by the solid wood flooring industry edged up 1.0% in 2018 over 2017. Single-Family housing starts rose 9.8% the first four months of 2018 compared to the same period in 2017.
*2018 Annualized
0
50
100
150
200
250
300
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018
Millio
n S
qu
are
Feet
World Imports of Hardwood Flooring to the US
Source: USDA FAS
Graph: HMR
From peak in 2005, flooring
imports declined 95.0%, or
256MMSF. From the low point
to *2018, flooring imports rose
180.1%, or 24.5MMSF.
*2018
Annualized
through April.
410
420
430
440
450
460
470
480
Furniture Moulding/Millwork Cabinets
Consumption of US Hardwoods Million Board feet
2017
2018
+1.9%
- 0.8%
- 0.4%
Grade Lumber Consumption 2018
Domestic Markets
52.9%
Exports to
China
25.9%
Exports to Rest of
World
21.2%
Sources: Various Industry and Government Sources and HMR Graph: HMR
0%
10%
20%
30%
40%
50%
60%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018
Percentage of Total US Hardwood Lumber Exports (Volume)
China
Canada
Vietnam
European Union
MexicoSource: USDA FAS Graph: HMR
*2018 Annualized Y-T-D
0
200
400
600
800
1000
1200
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 *2018
Mill
ion
Bo
ard
Fe
et
US Exports of Hardwood Lumber to China
1999 - 2006
US Furniture Manufacturing
Shift to China and US Housing Boom 2006 - 2009
US Housing Bust
and Worldwide Economic Turmoil
China's Growing
Middle and Upper
Classes Consuming
US Hardwoods
1999 - 2006 + 759.5%
2009 - 2018 + 435.7%
Source: USDA FAS Graph: HMR Executive®
Source: USDA FAS Graph: HMR Executive® * Y-T-D thru April
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Billio
n B
oard
Feet
Consumption Estimates
Pallets Railway Ties Board Road/Mat Timbers
Sources: RTA and HMR Graph: HMR
2010 2011 2012 2013 2014 2015 2016 2017 2018
Pallets 3.2 3.26 3.27 3.643 3.685 3.589 3.265 3.063 3.237
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
3.6
3.8
2010 2011 2012 2013 2014 2015 2016 2017 2018
Billio
n B
oard
Feet
© 2018 HMR 2010 to 2018 +1.2%
2017 to 2018 +5.7%
15,500
16,000
16,500
17,000
17,500
18,000
18,500
19,000
19,500
20,000
20,500
21,000
21,500
22,000
22,500
23,000
0
500
1,000
1,500
2,000
2,500
4/1
/16
5/1
/16
6/1
/16
7/1
/16
8/1
/16
9/1
/16
10
/1/1
6
11
/1/1
6
12
/1/1
6
1/1
/17
2/1
/17
3/1
/17
4/1
/17
5/1
/17
6/1
/17
7/1
/17
8/1
/17
9/1
/17
10
/1/1
7
11
/1/1
7
12
/1/1
7
1/1
/18
2/1
/18
3/1
/18
4/1
/18
5/1
/18
Pro
du
cti
on
Crosstie Production and Inventory Twelve Month Moving Average
(Thousand Ties)
Production
Inventory
Inve
nto
ry
Source: Railway Tie Association
Graph: HMR
Railway 2010 2011 2012 2013 2014 2015 2016 2017 2018
Ties 0.89 0.98 1.04 1.11 1.03 1.08 1.09 1.06 1.07
0.50
0.60
0.70
0.80
0.90
1.00
1.10
2010 2011 2012 2013 2014 2015 2016 2017 2018
Billio
n B
oard
Feet
2010 to 2018 +20.4%
2017 to 2018 +1.5%
Source: Railway Tie Association Graph: HMR
Board
Road/Mat 2010 2011 2012 2013 2014 2015 2016 2017 2018
Timbers 0.198 0.243 0.267 0.424 0.413 0.318 0.357 0.368 0.372
0.000
0.050
0.100
0.150
0.200
0.250
0.300
0.350
0.400
0.450
2010 2011 2012 2013 2014 2015 2016 2017 2018
Billio
n B
oard
Feet
© 2018 HMR
2017 to 2018 +1.1%
4,000
5,000
6,000
7,000
8,000
9,000
10,000
11,000
12,000
13,000
Millio
n B
oard
Feet
Eastern US Hardwood Production
Production Peaked in 1999 at an
est. 12,619,000,000 board feet
1960 est.
7,672,500,000
board feet
1975 est.
7,157,500,000
board feet
Sources: US Census Bureau, US Forest Service, and HMR
Graph: HMR
© 2018 HMR
2017 production was
8,308,037,400.
Estimated 58 year
average is
9,368,090,300
board feet.
*Annualized thru June
5
6
7
8
9
10
2010 2011 2012 2013 2014 2015 2016 2017 2018
Bil
lio
n B
oa
rd F
ee
t
Consumption of Hardwood Lumber by Major US Markets and Total Supply of Hardwood Lumber
Consumption
Supply
Consumption
Supply
© 2018 HMR © 2018 HMR
What are the challenges to the long-term success of US hardwood Sawmills?
Log Exports
300,000,000
320,000,000
340,000,000
360,000,000
380,000,000
400,000,000
420,000,000
440,000,000
460,000,000
480,000,000
500,000,000
520,000,000
540,000,000
560,000,000
580,000,000
600,000,000
2000 2002 2004 2006 2008 2010 2012 2014 2016 *2018
Bo
ard
Feet
US Hardwood Log Exports
Source: USDA FAS
Graph: HMR *2018 Annualized thru May
From 2017 to 2018, log exports rose 19.7%.
From 2013 to 2018, log exports jumped 67.9%.
If log exports hold the five month pace, 2018
2007
Ash Birch Cherry Beech Tropical Paulownia Western Red Alder
Other Temperate
20.2%
Maple
16.6%
Red Oak
12.4%
White Oak
15.6%
Poplar
9.1%
Walnut
US Exports of Hardwood Logs to World Markets
Source: USDA FAS
Graph: HMR
Red Oak
23.5%
Maple
18.3%
Ash
12.4%
Walnut
11.9%
White Oak
11.7%
Poplar
6.7%
Birch
6.5%
2018 Other Temperate
5.1%
US Hardwood Log Exports Source: USDA FAS
Graph: HMR
What are the challenges to the long-term success of US hardwood Sawmills?
Log Exports
Labor Shortage
What are the challenges to the long-term success of US hardwood Sawmills?
Log Exports
Labor Shortage
Too many eggs in one basket
What are the challenges to the long-term success of US hardwood Sawmills?
Log Exports
Labor Shortage
Too many eggs in one basket
Wood By-Products
What are the challenges to the long-term success of US hardwood Sawmills?
Log Exports
Labor Shortage
Too many eggs in one basket
Wood By-Products
Higher Interest Rates
Positives:
• We have an abundant supply of hardwood
timber owned by private landowners willing to
sell it for the right price.
• We have ample sawmill capacity to supply the
industry’s current needs and outlets for total
production.
• We have a very stable supply and demand
balance.
• And a very resilient hardwood industry.
0
20,000,000
40,000,000
60,000,000
80,000,000
100,000,000
120,000,000
140,000,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 *2017
US Hardwood Log Exports Excluding Canada
Red Oak Ash White Oak Walnut
Source: USDA Foreign Agricultural Service
Graph: HMR Executive®
* Annualized
0
75,000
150,000
225,000
300,000
375,000
450,000
1953 1977 1987 1997 2007 Most Recent
Data
Mil
lion
Cu
bic
Fee
t
Net Volume of Hardwood Growing Stock on
US Timberland
Privately Held
Total Public
44.5%
18.0%
12.0%
13.5% 5.7%
41.6%
17.5%
11.4%
9.4%
5.4%
59.7% 20.6% 14.7% 31.4% 6.9%
Percent Change in Growing Stock Volumes on
Public, Private, and Total US Timberland
Source: USDA Forest Service Graph: Hardwood Market Report
