Mixed Signals in September for Forest Products Industry
Read About Tariffs, Mergers, and Market Shifts...
Various observers and analysts of the forest products economy painted a varied profile of the industry in early September, with different end products reflecting different conditions.
The Wall Street Journal pointed out softening demand for cardboard as a potential indicator of a slower American consumer economy, amidst slightly increased inflation from earlier in the year. Prices for linerboard increased, and capacity has shrunk as demand has fallen.
E-Commerce consumers have shrunk linerboard usage as prices increased via trimming packages and substituting other packaging materials, according to the Journal.
In the meantime, two huge mergers have allowed for a reduction in supply (International Paper with DS Shaw and Smurfit Kappa with West Rock).
Meanwhile, tariffs on imports from South America might help improve the domestic plywood market in 2025. A 50% tariff announcement on Brazilian wood products seemed to have coincided with a 36% drop in pine plywood imports from that country, according to information from Frereswood, a producer of veneer and engineered wood products.
At the same time, dimensional lumber prices appear to have stabilized in September, according to Madison’s Lumber Reporter. The volatility earlier in the decade has stabilized, and producers are hoping for a bump in prices as the Federal Reserve Board contemplates further interest rate reductions.