Southeast Business Trends – May 2022

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As Hardwood sales remain strong in the Southeast, industry sources in the region continue to look for ways to adapt to the current economic climate.

“The market is very much mixed,” noted one sales manager for a sawmill located in Alabama. “A lot of mills have logs, and some are scared to hold inventory or not hold inventory. Everybody’s doing something different.”

 He explained that there are noticeable fluctuations related to species, as some prices are holding from six months ago while others are falling, depending on the type of Hardwood being sold. “For us, Red Oak, White Oak, Ash and Poplar are selling best, with Red Oak and Poplar holding the top positions,” he said. “We’re holding White Oak, as we think it will become much more scarce and valuable in the next 60 to 120 days.” Among the species that are selling well, he notes that the lower grades and Commons seem to be doing better than FAS.

Another sales manager for an Arkansas-based sawmill stated that White Oak in No. 2 Common and Select is selling the best from their inventory of Red and White Oak, Sap Gum, and Hickory. He noted that FAS Red Oak seems to be softer than anything else.

A sales manager for a lumber and flooring manufacturer in Tennessee reiterated, “Demand is good, it’s as high as it’s been in a while. Supply is the issue. Of course, that creates the demand on the outside, because they can’t get it from anywhere, people are calling around to new places.”

All sources interviewed mention the current economic climate as a primary concern. “Everyone is complaining about either the freight rates or the fuel,” noted one interviewee. “Transportation cost is an issue, whether we’re paying the additional cost or sharing it. Uncertainty about interest rates and the political situation are becoming very critical related to the number of houses being built, cabinetry and flooring. They’re all affected by the interest rates going up.”

Another source stated, “Our end users are mostly brokers and they’re really struggling for supply and labor, like everybody else. Those are the two hard issues, but they seem to be waiting for the other shoe to drop. Everything’s been so good and we look at what’s going on outside…everybody feels like there’s no way that this can keep up.”

Rising fuel cost remains a looming uncertainty for most. “Freight cost is extremely high and gas has gone up,” said one source. “Fuel is over $5 a gallon where we are and will get worse. A lot of the low-end products will be mostly affected. The price will be more noticeable on the lower end.”

 The owner of a Cypress sawmill located in Southern Louisiana is seeing record sales with retail and contractor orders for 8/4 timbers, as well as 4/4 thickness for craftsmen. “The sales are up but South Louisiana is usually different than the rest of this country because of the oil and gas fields down here. When there’s a recession in the rest of the country, we don’t experience it because of our location. Even factoring that in, since pricing is going up, I’m afraid it will get so expensive that people may just stop buying Cypress. It priced itself out in the 80s and seems to be heading the same direction now.”

The sawmills located in other areas feel an even greater pinch, despite focusing on local markets. “The market seems to be good but the Diesel fuel issue is having a big impact on us. We’re getting a fuel surcharge out of some people, but for some, we can’t. We were able to get trucks because we don’t haul very far, so transportation issues weren’t negatively affecting us until very recently, when the price of Diesel went up substantially.”

By Miller Wood Trade Publications

The premier online information source for the forest products industry since 1927.

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