A run of rising US sawlog prices stretching back more than
three years has come to an end, undermined by a slowdown in China's
construction sector, besides by a softer domestic market.
Prices of US sawlogs – the highest-value parts of a trunk, sent
to sawmills rather than for pulping – tumbled in May, taking their declines for
2014 to up to 15%, depending on the species of tree and the logging region,
Wood Resources International said.
The declines in prices, "after having trended upward for
over three years", was reflected in both of the major US lumber regions, in the
north west and south of the country.
And it reflected weakening demand "from both domestic
sawmills and the export market in Asia", the US-based analysis group said.
Lumber markets in both of Asia's top two economies shown
weakness in 2014, with Japan's, falling 4% year on year in the January-to-March
period, and making their weakest start to a year since 2010.
In China, a "slowdown in the economy has impacted the
construction sector, resulting in a decline in lumber imports during the first
four months of 2014", Wood Resources International said.
Chinese property sales fell by 16%, month on month, in the
first half of June, latest data from China Confidential show.
In fact, Chinese imports of US, and Russian, lumber overall
have held up relatively well, as have Russian shipments, but poor purchases
from other countries have sagged, producing knock-on effects on other markets.
With Canadian lumber exports to China down by 22% in the
January-to-March period, and to Japan 32% lower, merchants have sought to place
extra volumes nearer home, with shipments to the important US market rising by
For the overall US lumber market prices were 5-17% lower in
May than at the start of the year, which had started strong, with Douglas fir
log prices hitting their highest since 2006 in the north west, and those of
hemlock, also used in construction, reaching an 18-year high.
"The recent price trend for lumber in North America has been
downward after sharp increases last summer and fall," the Washington state-based
However, there is hope for producers, with Chicago lumber
futures staging some recovery from an early June low of $293.10 per 1,000 board
feet, for the September contract, which stood at $333.00 on Tuesday.
London-based Capital Economics has forecast a rise in US
lumber prices to $400 per 1,000 board feet by the end of the year, boosted
demand from the country's own housebuilders.