Market Report: Navigating the Winter Slowdown in Wood Products

The winter slowdown in the wood products market seems to have started. Panel sales over the last two weeks were slower than the previous six weeks. The good news is that sales volumes didn’t disappear, they just slowed. There is still a sense of little or no inventory through distribution but a reluctance to build inventory. The usual year end goals are in play; keep inventories down, make end of year financial statements look as good as possible, and be ready for a potential uptick in the New Year.

Veneer sales aren’t seeing the typical anticipatory volume uptick we usually see for potential inventory buildup early in the year. Yes, prices are rising, and volumes are on firmer footing, but we would like to see an aggressive start to buying raw material for manufacturer inventory gain as if they are optimistic of continued demand into 2025.

I think this year has been brutal enough for most producers, and now they aren’t looking to build any inventory until they see a good market right on the horizon. Log prices are still too high to convert to products at a reasonable cost, so most producers are keeping production levels to what they can sell without losing their shirts.

This has been a long, Fed-driven, manufacturing downturn and most producers haven’t had a great time in 2024. There are two competing perspectives right now. One is that the economy will be slow to restart, and we won’t see dramatic improvement until the second or third quarter of 2025. The other is that there has been significant manufacturing capacity taken out of the market this last year and supply will not be available even with an incremental increase in demand.

I don’t know if anyone can predict how this next year will turn out, especially with the dramatic changes being proposed by the incoming administration. Fed rate cuts have yet to yield significant decreases in mortgage rates, although mortgage rates are down over the last month. Trump’s tariff talk has the potential to disrupt global markets significantly, but there is still no clarity as to what actual tariffs will be levied, against whom, or what the duration will be.

As an American manufacturer that feels abused by overly burdensome regulation, continued reduction of timber supply by Federal and State land managers, and the increase of foreign wood imports due to the strong US dollar and predatory foreign economies, it is easy to love Trump’s “America First” pledge. How this will work out in practice is unknown.

It also seems that Americans, and our politicians, have rediscovered the idea of fiscal responsibility as the discussions around the US debt and deficit are more pronounced. It would be remarkable if the Department of Governmental Efficiency made concrete efforts to get the US back onto secure financial footing.

We ARE seeing more projects that were shelved in 2024 come back for requote and reconsideration. We hope this is the beginning of a strong trend to build additional housing to alleviate some of the housing affordability issues.