January 2018 International Trade (Softwood Lumber)

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Softwood lumber exports retreated (8 MMBF or -5.4%) in January, while imports fell (99 MMBF or -8.0%). Exports were 6 MMBF (+4.6%) above year-earlier levels; imports were 160 MMBF (-12.2%) lower. As a result, the year-over-year (YoY) net export deficit was 166 MMBF (14.1%) smaller. Moreover, the average net export deficit for the 12 months ending January 2018 was 11.6% 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: 23.6%) and North America (of which Canada: 21.1%; Mexico: 17.2%) were the primary destinations for U.S. softwood lumber exports in December; the Caribbean ranked third with a 19.4% 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 (88.5%) of softwood lumber imports into the United States. Imports from Canada are 16.5% lower YTD than the same months in 2017. Overall, YTD exports were up 4.6% compared to 2017, while imports were down 12.2%. 

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U.S. softwood lumber export activity through the Eastern customs region represented the largest proportion in January (39.7% of the U.S. total), followed by the West Coast (29.0%) and the Gulf (21.9%) regions. However, Seattle regained its lead (16.9% of the U.S. total) over Savannah (14.8%) as the single most-active district. At the same time, Great Lakes customs region handled 61.2% of softwood lumber imports -- most notably the Duluth, MN district (27.4%) -- coming into the United States. 

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Southern yellow pine comprised 33.9% of all softwood lumber exports in January, Douglas-fir (12.1%) and treated lumber (14.2%). Southern pine exports were up 14.8% YTD relative to 2017, while treated: -5.9%; Doug-fir: +10.5%.

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.