With the volatility of the global economy and the changing needs of the construction industry, the timber market is facing a new set of challenges and opportunities. In particular, issues such as unstable timber prices, weather factors, and high mortgage rates have had a profound impact on the timber market. A few days ago, a number of foreign timber industry veterans and timber merchants gathered together to predict the future development trend of the timber market based on the current market conditions, especially on the major adjustment of output.
Current market conditions
In response to the current timber prices, industry insiders said that at present, lumber and panel prices exceeded expectations, showing a decline in the second quarter, which is in stark contrast to the usual period of business recovery. The main reason for this is that the weather has affected demand, while wood and panel manufacturers are also facing the problem of overcapacity.
In addition to the weather impact, the lack of demand from the repair and renovation industry and the new home construction market led to a decline in the price of frame timber. Moreover, high mortgage rates and inflation have also stifled the market to some extent.
Price differences and fluctuations for specific types of wood
In the timber market, the prices of different types of timber show significant differences and fluctuations. For example, compared to spruce (SPF) or Douglas fir, southern ponderosa pine (SYP) is comparatively less volatile and more affordable, which has allowed it to occupy an increasing share of the size timber market. In contrast, OSB pricing is more regional, with these regions competing with each other on price and shipping rates making them competitive in other regions.
Future trend forecasting
Looking ahead to the next few months, the timber market will face a series of challenges and uncertainties. Industry sources said prices were expected to rise by 20 percent in the event of more forest fires or additional plant cuts.
However, over the past few months, despite such predictions, prices have actually fallen at a slow but steady rate. And as more and more lumber mills make announcements about production cuts, and as we get closer to the planned summer shutdowns for many mills. But so far, these changes have not had a significant impact on prices.
Considering the Fed's recent pivot to a policy that is likely to cut interest rates only once in 2024, this will require timber producers to make significant adjustments to production to keep supply and demand balanced for the rest of the year. This policy adjustment will have a profound impact on the supply and demand relationship in the timber market, which in turn will affect the price trend.
Impact on timber dealers and dealers
For dealers, the current market conditions require them to be more cautious in their inventory management. And due to market uncertainty and price instability, dealers are reluctant to buy more than 30 days of inventory. However, it also presents an opportunity for dealers who are able to flexibly adjust their inventory strategies.
There are also timber traders who believe that although the current market environment has brought certain challenges, their resilience and ability to cope with these challenges can be well managed. And said the current downturn will be short-lived with the potential housing shortage problem. Once measures to lower interest rates and lower inflation are implemented, activity and demand are expected to increase in 2025.