September 2017 International Trade (Softwood Lumber)

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Softwood lumber exports decreased (13 MMBF or -7.9%) in September, while imports rose (149 MMBF or +12.8%). Exports were 12 MMBF (+9.1%) above year-earlier levels; imports were 26 MMBF (-2.0%) lower. As a result, the year-over-year (YoY) net export deficit was 237 MMBF (-19.1%) lower. Moreover, the average net export deficit for the 12 months ending September 2017 was 9.5% smaller than the average of the same months a year earlier (the “YoY MA(12) % Chng” series shown in the graph above). 

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Asia (especially China: 25.3%) and North America (of which Canada: 16.1%; Mexico: 18.2%) were the primary destinations for U.S. softwood lumber exports in September. Not surprisingly, the Caribbean ranked third with an 18.8% share. Year-to-date (YTD) exports to China were +19.6% relative to the same months in 2016. Meanwhile, Canada was the source of most (93.5%) of softwood lumber imports into the United States. Interestingly, imports from Canada are 14.5% lower YTD than the same months in 2016. Overall, YTD exports were up 4.6% compared to 2016, while imports were down 11.6%. 

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U.S. softwood lumber export activity through the Eastern customs region represented the largest proportion in September (38.4% of the U.S. total), followed by the West Coast (30.4%) and the Gulf (25.4%) regions. However, Seattle maintained a small lead (16.5% of the U.S. total) over Mobile (15.7%) and Savannah (14.0%) as the single most-active district. At the same time, Great Lakes customs region handled 64.8% of softwood lumber imports -- most notably the Duluth, MN district (24.9%) -- coming into the United States; interestingly, Seattle and Detroit were tied with 16.2% each. 

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Southern yellow pine comprised 33.7% of all softwood lumber exports in September, followed by treated lumber (13.0%) and Douglas-fir (15.1%). Southern pine exports were up 9.2% YTD relative to 2016, while treated: +28.4%; Doug-fir: +9.2%.

The foregoing comments represent the general economic views and analysis of Delphi Advisors, and are provided solely for the purpose of information, instruction and discourse. They do not constitute a solicitation or recommendation regarding any investment.