Oak,Poplar,Walnut Prices- North American Lumber Market

North American Lumber Market

16-28th February 2006

Changes in US GSP status for some tropical plywood
The Office of the US Trade Representative (USTR) has informed that some Generalized System of Preferences (GSP) plywood products from Brazil, Colombia, Ecuador, Guyana and Russia may have their duty-free status changed for exceeding the competitive need limitations threshold (CNL). Products that exceeded their CNL limits in 2005 will lose their duty-free status on 1
July 2006. If imports from a specific country exceed $120 million or are greater than 50% of the total US import value in 2005, the GSP benefits for that product may be removed because that country is considered a competitive producer. In some cases, products may be granted de minimis waivers if they exceeded the 50% threshold, but only if total imports were less than $17.5 million in 2005 (See List III and IV).

There are four lists comprising the "interim 2005 Import Statistics Relating to Competitive Need Limitations. " The relevant wood product items are listed below:

List I: items graduated or exceeding CNL
This lists items that have already exceeded CNL, such as Brazilian plywood of wood sheets, n/o 6 mm thick each ply, with outer plies of coniferous wood (US HTS code 4412.19.40, 54.1% of total imports). This product lost GSP in July 2005 and there is a petition for reinstatement filed with the USTR. A decision on that petition is expected by 30 June.

List II: items approaching CNL
This list identifies GSP-eligible articles that have not yet exceeded, but are approaching the CNL. Depending on final 2005 import data, these articles are poised to lose GSP duty-free treatment on 1 July 2006, unless a waiver is granted. Such waivers were requested before 22 April 2005. Two plywood products fall in this category:
Brazilian plywood of wood sheets, n/o 6 mm thick, tropical outer ply, face ply of Spanish cedar or walnut (US HTS code 4412.13.25, 65.1% of total imports); and Russian plywood of wood sheets, n/o 6 mm thick each, with outer plies of coniferous wood (US HTS code 4412.19.30, 82.1% of total imports).

List III: Possible de minimis Items
List III is a subset of list II identifying GSP-eligible articles that are close to or above the 50% CNL, but may be eligible for a de minimis waiver of the 50% CNL. Each year de minimis waivers are considered automatically without a petition, and public comments are invited. Both plywood products from Brazil and Russia in List II belong to this list.

List IV: Possible redesignation Items
List IV identifies articles that are currently not receiving GSP duty-free treatment but have partial import levels below the CNL and thus may be eligible to be considered
for re -designation, depending on final 2005 import data.

Eight plywood products fall in this category: Brazilian plywood sheet n/o 6 mm thick outer ply of non-tropical hardwood, face ply of Spanish cedar or walnut (US HTS code 4412.14.25); Brazilian plywood sheet n/o 6 mm thick, at least one outer ply of non-coniferous wood (US
HTS code 4412.14.31); Brazilian Plywood sheets n/o 6 mm thick at least one outer ply of non-coniferous wood (US HTS code 4412.14.56); Colombian Plywood nesoi, at least one hardwood outer ply, with tropical hardwood ply (US HTS code 4412.22.41); Ecuadorian Plywood
nesoi, at least one hardwood outer ply nesoi, no particle board (US HTS code 4412.29.46); Ecuadorian Plywood nesoi, softwood outer plies, least 1 ply tropical hardwood, no particle board (US HTS code 4412.92.41); Guyanese Plywood nesoi, softwood outer plies, at least 1
ply tropical hardwood (US HTS code 4412.92.51); Colombian Plywood nesoi, softwood outer plies, no tropical hardwood ply, no particle board (US HTS code 4412.99.56).

Warm weather boosts US house building
US new residential construction surged 14.5% in January to its highest level in almost 33 years, helped by record warm weather. The US Commerce Department said housing starts reached a seasonally adjusted annual rate of 2.28 million. Building permits, an indicator of future
construction, climbed by 6.8% to 2.22 million.

The US hardwood market: the Southern region
This is the second article on the US hardwood market, focusing on the Southern hardwood region. The South has the greatest diversity of hardwoods, but relatively few are of great commercial value, such as cherry, oak (red and white) and soft maple. The Southern USA is also the turf for the Southern pine. This softwood tree has a relatively high density and is harder than many hardwood species. As such, the Southern pine stands in direct competition with many deciduous trees.

Prices of key species in the US Southern
($/1000 bf, 1”, top quality, FOB mill, truckload quant.)

The overall demand for the key species and grades of Southern hardwoods has vastly improved recently. Nevertheless, sales margins for sawmills are still very thin. Log and timber costs seem to be too high in relation to current lumber prices.

Oak lumber in tight supply
Production of sawn red oak is relatively low and supplies of green oak are tight in the Southern region. There is an ongoing and unsatisfied demand, in particular for green oak lumber. The strip flooring industry is forced to rely upon supplemental purchases of kiln-dried oak and/or oak of lower quality (#1C), competing with traditional #1C-users, such as the furniture and cabinet industry.

Oak prices have been firming, most notably for the lower quality grades. List prices are now almost $10 per thousand board feet (MBF) higher than a few weeks ago.

The excess production of thicker oak stocks (5/4” and 6/4”) early in 2005 has been now balanced by demand. The principal user of thick green oak is the truck-trailer flooring industry. The market climate for top graded oak (FAS & 1F) is also tight. Specialty products, such as lumber manufactured from the center of the log, are in high demand. Nevertheless, keen competition among lumber suppliers prevented prices from moving higher.

Subdue demand for lower grades of white oak
Prices of lower quality grades (#1C) of white oak are no longer competitive in relation to red oak which emerged as a frequently used substitute wood. Therefore, demand by domestic or foreign end-users for the lower grades of white oak remains limited. Simultaneously, some excess inventory has accumulated with suppliers, most notably for kiln-dried lumber. In consequence, prices for kiln-dried, low-graded white oak are at about $15 per MBF lower than a few weeks ago. Prices for green white oak are also softening but not to the same extent.

In contrast, buyers continue to show interest for top-graded (FAS & 1F) white oak. Demand for green lumber has been buoyed by purchases from the strip flooring industry and their need to restock inventories to meet future commitments for their products. The truck trailer flooring industry has a constant need for thicker stocks (green 5/4” and 6/4”). Furthermore, consistent requirements in Europe for kiln-dried lumber generated brisk export sales. Prices for both green and kiln-dried high-grade white oak are firming.

Strong demand for poplar
The supply of poplar lumber has been curtailed by the continued demand for logs from veneer and chip plants. As a result, prices have come under upward pressure, particularly for top-quality green lumber. MBF prices for such items advanced by more than $10 during the last month.

US Imported Sawnwood Prices

*Dimension lumber; **Rough lumber
Quality variations may greatly influence monthly average prices.

Abbreviations

LM Loyale Merchant, a grade of log parcel	Cu.m Cubic Metre
QS Qualite Superieure	Koku 0.278 Cu.m or 120BF
CI Choix Industriel	FFR French Franc
CE Choix Economique	SQ Sawmill Quality
CS Choix Supplimentaire	SSQ Select Sawmill Quality
FOB Free-on-Board	FAS Sawnwood Grade First and
KD Kiln Dry	Second
AD Air Dry	WBP Water and Boil Proof
Boule A Log Sawn Through and Through	MR Moisture Resistant
the boards from one log are bundled	pc per piece
together	ea each
BB/CC Grade B faced and Grade C backed	MBF 1000 Board Feet
Plywood	MDF Medium Density Fibreboard
BF Board Foot	F.CFA CFA Franc
Sq.Ft Square Foot	Price has moved up or down

Source: ITTO' Tropical Timber Market Report