Southeast Business Trends
White Oak Dominates Winter
The majority of Southeastern lumber sources shared that they and their customers are optimistic the market will improve despite complaints about high inventory affecting demand. Many also reported the closing of mills, labor struggles and product pricing as industry issues.
In Arkansas, a lumber source reported that railroad ties “seem to be steady and there is a bit more interest in the cant market. We have seen an uptick there. We’re selling our lumber, but it is for low prices. We can move everything, but we did lose our 5/4 market because the inventory is so high, and businesses are trying to shrink that.”
Six months ago, “it might have been a little tougher,” he said. According to him, at the time of this report, the market is “the same as it was a month ago, even though there are signs that there could be an uptick here or there. There are some items that look like they could move and open some new markets, but that is in the very early stages.”
Their primary species are Red and White Oak. They also handle a “little Hickory and very little Ash and Cherry. 4/4 is what we’re limited to now. We don’t have the capabilities to cut a lot of thick stock because we’re not a very big company. We do not have a grader, so we sell our products mill run.” White Oak is their bestseller and the “better paying species as far as the lumber end in our area right now.”
He discussed the railroad tie market, stating that Red and White Oak and Gum were the species used and “all of them pay the same just like cants.”
In addition to their railroad tie and cant customers, they sell to cabinetry and flooring companies, but they do not export. They also “do pallet stock and pipe skids used in the oil fields. One positive event is that the market has increased a bit for the gas lines. Every now and then, I’ll hear a pallet company say they got an order they weren’t expecting but very few are feeling they are in a good position. I think there is a lot of hesitation because of the tariffs. There is a lot of speculation and hope that it will get better.”
“Just about every sawmill is struggling for employees because handling material is a physical job and people are out in the weather. The industry doesn’t pay a lot, either,” he added when asked if his company was experiencing any struggles. “So many people say that we need to upgrade the technology and minimize one or two employees, but the profits in the industry aren’t there for us to invest that money.”
White Oak is “good,” Red Oak is “in the middle” and Poplar is “bad,” according to a lumber representative in Kentucky, who believes the market is a “little worse” than six months ago.
Optimism is rising despite mill closures and labor challenges.
While Poplar sells, it is “dirt cheap.” He said 95 percent of their production is “4/4 and some 5/4, 6/4 and 8/4. We saw our products an eighth of an inch for drying.”
They transport much of their production to their parent company, which handles the exporting while “50 percent goes to our own flooring mill. The Poplar is sold to a lot of companies that make crown moulding and baseboards.
Lower grade Red Oak sells to flooring companies and most of our lower grades go within a 200-mile radius. My customers have shared concerns about the market — a lot of loggers are having a hard time making ends meet.
“The stave mills have slowed down because there is overproduction in the market and a lot of mills are going out of business. It’s good for a lot of people but bad for others.”
The market is “flat” in North Carolina, noted a lumber source. “I think it is caused by the tariff issues with Asia. It’s no secret the housing market has slowed down domestically. We’re not at maximum production but we’re holding up.”
It is “a little better than six months ago” and “sales have improved because more of the tariff issues have been solved.”
“Our primary species are Red and White Oak and Poplar,” which is “the best,” he said. They work with 4/4 through 8/4 in Poplar. “We have some propriety / specialty thicknesses” and “do all grades” including Nos. 1 through 3 Common and FAS.”
They have “worked hard the last few years to try and diversify our customer base,” he said.
They sell to end use manufacturers, distribution and concentration yards.
“I think my domestic customers are optimistic that better times lay ahead because the interest rates are dropping.
Home interest rates needed to drop below six percent. The inflation is not attached to the raw wood but everything else. Lumber has appreciated very little over the past few decades. We need some inflation on lumber,” he commented.
