May 18, 2022
Will the price of American White Oak lumber weaken this year?
The American White Oak lumber supply has been problematic for three years, and prices have gone through the roof. Back in 2019, for example, 4/4 1 Com grade cost about U$580/m3 and is now about U$1,100/m3 delivered to Asia. With almost doubled prices, many of our customers ask us if prices will continue to rise, stabilise, or reduce in the 2nd half of this year.
Due to a variety of reasons, the supply of White Oak was limited during the last years; with logs in short supply, many sawmills preferred to switch to Tulipwood (aka Yellow Poplar), a fast-to-dry species, or focused on Red Oak since the domestic demand for this species was booming.
We have seen massive labour shortages in forests, sawmills, seaports, and truckers. And, of course, the shipping issues caused by the non-availability of containers and vessels have greatly added to narrowing these bottlenecks.
Some of the issues improved; labour shortage is becoming less of a problem, and sea transport seems to get better both by the availability of vessel space and no other climbing freight rates.
China’s demand for American lumber (mainly lower 1 & 2 Com grades) is weak. Covid lockdowns in major cities affect furniture and flooring production, too. Still, it is unclear how long this will last, but it can be foreseen that China’s demand will rally in the 2nd half of this year. In addition, many furniture factories in Vietnam have been working at reduced capacity last year and have started to resume full capacity operations.
In Europe, the demand for American White Oak lumber, mainly for higher FAS & Prime grades, continues to increase due to the shortage of European Oak logs and lumber. Nevertheless, we expect American White Oak prices for FAS & Prime grades to weaken, but prices for 1 & 2 Com grades will remain steady and not reduce soon.