Hardwood Pallet Market
This year we’ve seen major softening in cant prices in the pallet market east of the Rockies. Last year during the transition from fall to winter, several pallet producers raised concerns about future winter weather creating hardwood raw material shortages. This did not prove to be true in most cases, and raw material supplies remained fairly stable throughout last year’s winter. This result set up this past spring and summer for times of plentiful hardwood supplies, which led to downward pressure on cant pricing. This trend holds true for most areas of the country as the year draws to a close
There’s been upward pressure on SYP and SPF prices for most of the year. Towards the end of the year, supplies of SPF diminished largely because of a lack of a softwood trade deal to fill the void left by the Softwood Lumber Agreement (SLA). With prices for industrial softwood increasing and industrial hardwood prices steadily sagging, some pallet producers have shifted some production from softwood to hardwood.
The major rub with this transition is that often customers don’t want to make the switch because of mold concerns. Also some are hesitant to yoyo back and forth between hardwood and softwood depending on which way the wind blows.
New pallet demand has been decent for most of the year. Reports are a little varied between strong and weak, shaking out to a healthy medium. Many did note that demand could be hit and miss week to week, picking up and slowing down. Many have blamed some volatility in the market on 2016’s rather flamboyant election cycle and the uncertainty that came along with it. Also, pallet users are trying to work with as little pallet inventory as possible. This means that orders can turn on or off fairly quickly depending on pallet utilization.
Western Pallet Market
In the western pallet market, we saw aggressive price increases in the first quarter. After that, industrial softwood prices stabilized. Prices remained fairly stable until we reached the one year anniversary of the expiration of the SLA. When we reached that point in autumn when industrial softwood prices typically start to cool, prices instead started to climb. Industrial softwood prices maintained upward pressure.
New pallet demand in the western pallet market has been fairly strong for most of the year. Most contacts have not had much concern in this area and have had had more of a focus on raw material supplies.
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