October 2017 International Trade (Softwood Lumber)

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Softwood lumber exports increased (2 MMBF or +1.5%) in October, while imports rose (74 MMBF or +5.7%). Exports were 9 MMBF (+6.2%) above year-earlier levels; imports were 8 MMBF (-0.6%) lower. As a result, the year-over-year (YoY) net export deficit was 17 MMBF (-1.3%) smaller. Moreover, the average net export deficit for the 12 months ending October 2017 was 10.1% 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: 24.5%) and North America (of which Canada: 19.6%; Mexico: 18.2%) were the primary destinations for U.S. softwood lumber exports in October. Not surprisingly, in light of last summer’s hurricanes, the Caribbean ranked third with a 15.2% share. Year-to-date (YTD) exports to China were +20.1% relative to the same months in 2016. Meanwhile, Canada was the source of most (93.9%) of softwood lumber imports into the United States. Interestingly, imports from Canada are 13.3% lower YTD than the same months in 2016. Overall, YTD exports were up 4.7% compared to 2016, while imports were down 10.5%. 

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U.S. softwood lumber export activity through the Eastern customs region represented the largest proportion in October (40.3% of the U.S. total), followed by the West Coast (31.1%) and the Gulf (20.9%) regions. However, Seattle maintained a modest lead (18.8% of the U.S. total) over Mobile (11.8%) and Savannah (14.2%) as the single most-active district. At the same time, Great Lakes customs region handled 67.0% of softwood lumber imports -- most notably the Duluth, MN district (27.0%) -- coming into the United States. 

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Southern yellow pine comprised 31.2% of all softwood lumber exports in October, followed by other pine (15.3%), treated lumber (13.6%) and Douglas-fir (12.5%). Southern pine exports were up 9.0% YTD relative to 2016, while other pine: +95.6%; treated: +25.1%; Doug-fir: +10.3%.

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.