December 2017 International Trade (Softwood Lumber)

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Softwood lumber exports retreated (11 MMBF or -7.0%) in December, while imports fell (97 MMBF or -7.1%). Exports were 16 MMBF (+12.9%) above year-earlier levels; imports were 15 MMBF (-1.2%) lower. As a result, the year-over-year (YoY) net export deficit was 31 MMBF (2.7%) smaller. Moreover, the average net export deficit for the 12 months ending December 2017 was 10.3% 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: 26.5%) and North America (of which Canada: 16.4%; Mexico: 16.3%) were the primary destinations for U.S. softwood lumber exports in December. Not surprisingly, in light of last summer’s hurricanes, the Caribbean ranked third with a 20.1% share. Year-to-date (YTD) exports to China were +22.9% relative to the same months in 2016. Meanwhile, Canada was the source of most (90.7%) of softwood lumber imports into the United States. Imports from Canada are 11.8% lower YTD than the same months in 2016. Overall, YTD exports were up 5.8% compared to 2016, while imports were down 8.8%. 

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U.S. softwood lumber export activity through the Eastern customs region represented the largest proportion in November (40.9% of the U.S. total), followed by the West Coast (28.0%) and the Gulf (23.4%) regions. Moreover, Seattle lost its lead (16.9% of the U.S. total) to Savannah (17.2%) as the single most-active district. At the same time, Great Lakes customs region handled 60.7% of softwood lumber imports -- most notably the Duluth, MN district (25.3%) -- coming into the United States. 

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Southern yellow pine comprised 35.4% of all softwood lumber exports in December, followed by other pine (15.4%), Douglas-fir (12.6%) and treated lumber (12.2%). Southern pine exports were up 9.4% YTD relative to 2016, while other pine: +112.7%; treated: +23.4%; Doug-fir: +8.8%.

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.