Hardwood Markets Matter | June 2023 Hardwood Matters

Hardwood Markets Matter, and it is important for NHLA to share market details of the entire Hardwood Industry. We appreciate the support of allied associations and publishers in gathering and sharing this important market information that can help you understand the complete hardwood industry picture.

A slower economy is reducing demand for lowgrade items. Most respondents to our spring industry survey ranked demand for pallet cants and frame stock as somewhat weak or very weak. The notable exception to the slowdown is railroad ties, for which the majority said demand was either somewhat or very strong in mid-April. Further, most expect tie demand to remain unchanged or improve over the next 3 to 6 months, despite rail traffic originating in the U.S. being down 6% yearover-year through the first week in April (American Association of Railroads).

While crosstie prices rose throughout 2021 and 2022, inventory levels at the start of 2023 were 2.6 million ties (~15%) below the 21year average. The deficit primarily resulted from the strength of grade lumber and other low-grade markets; fewer sawmills were cutting ties during that time. Despite increased tie production

since mid-2022, tie inventories have yet to catch up, and log supply issues this spring suppressed additional production increases. Research on historic trends indicates that tie prices frequently stay strong well after grade prices have fallen, providing muchneeded financial support for sawmills during down market cycles. This cycle is already bearing that out, and industry optimism suggests tie markets will remain strong for the rest of 2023.

The HMR Demand Index (HDI) is a feature in HMR Executive® that illustrates monthly trends in reported demand from 10 major domestic markets for hardwood lumber. Components of the index are color coded with various shades of blue when demand is slow, they transition to gray when demand is fair, and then to light red and deep red when demand moves from good to strong.