Indianapolis, IN–The 124th Annual Indiana Hardwood Lumbemen’s Association (IHLA) Convention and Exposition was held here recently at the Indianapolis Marriott Downtown. Approximately 900 people attended. Pennsylvania Lumbermens Mutual Insurance Company was a co-presenter of the event.
The three-day themed event (“Aloha Indy!”) was packed with tons of exhibitors, guest speakers, seminars and networking opportunities.
Among the guest speakers were: Amy Woodall, Sandler Training Trustpointe, who spoke about handling difficult work situations; representatives of the Real American Hardwood Promotion Coalition, who gave an update; Michael Snow, American Hardwood Export Council, addressed Hardwood exports over the past year; David Rash, Taylored Systems, spoke on cyber security/disaster preparedness; and Dan Meyer, Hardwood Review, presented a Hardwood market update.
“We are 16 months into the fastest run-up in Hardwood lumber prices in at least 36 years – maybe ever,” Meyer said. “Many lumber species/grades/thicknesses remain at record highs, caused by a unique set of internal and external factors.”
What’s driving the price trends? Meyer reported that it is not exports. The volume of exports was 24 percent lower in 2021 than during the peak in 2017, but average lumber prices were 26 percent higher in 2021.
He noted that, while strong domestic demand for both grade lumber and low-grade was an important factor driving prices upward in 2021—driven by demand for flooring, cabinets, furniture, pallets and ties—lumber shortages were the more important driver. With Chinese demand down and domestic demand so strong, Meyer stated that some sawmills have flipped from 80 percent export sales to 80 percent domestic sales.
Following the 18-month trade war with China and months of pandemic-related disruptions in demand and production, lumber surpluses turned to shortages around October 1, 2020, after which prices started to climb for nearly all lumber species and grades.
Those lumber shortages were caused by a combination of low log availability, labor shortages, lack of trucks and containers, rolled ocean bookings and, to some extent, a shift by some Hardwood mills to producing pine. Log availability is much improved in most regions today and some of the mills that had switched to pine are back on Hardwoods. The employment situation is only marginally better for some mills, however, and there is no end in sight for shipping and supply chain issues.
So, where are we headed as an industry? Meyer’s data suggests that the historic market runup peaked in October 2021, but notes it has held near that peak level for more than three months, and prices for some species are still climbing. With global and export demand still strong; global supplies low; and production and deliveries constrained, a market “collapse” is not imminent, he said.
Yes, some of the historically high lumber prices will adjust lower as supply gradually comes back in line with demand, but Meyer does not see prices returning to low pandemic pricing. Industry contacts agree, with many now predicting strong markets to continue through at least the middle of this year, and Meyer added, “This will be the first market runup in decades that does not end in an equally dramatic collapse.”
In addition to hearing updates on the lumber market and related issues, attendees enjoyed an IHLA Luau and some attended the Fellowship of Christian Lumbermen meeting as well as the American Walnut Manufacturers Association meeting.
Learn more about the IHLA by visiting www.ihla.org.
