December 2018 International Trade (Softwood Lumber)

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Softwood lumber exports extended the downturn (33 MMBF or -26.0%) in December, along with imports (8 MMBF or -0.7%). Exports were 48 MMBF (-34.1%) below year-earlier levels; imports were 131 MMBF (-10.5%) lower. As a result, the year-over-year (YoY) net export deficit was 83 MMBF (-7.5%) smaller. Also, the average net export deficit for the 12 months ending December 2018 was 3.4% 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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North America (42.3%; of which Canada: 22.0%; Mexico: 20.2%) and Asia (34.4%; especially China: 7.9% and Japan: 8.7%) were the primary destinations for U.S. softwood lumber exports; the Caribbean ranked third with a 14.8% share. Year-to-date (YTD) exports to China were -20.8% relative to the same months in 2017. Meanwhile, Canada was the source of most (90.7%) of softwood lumber imports into the United States. Imports from Canada were 4.7% lower YTD than the same months in 2017. Overall, YTD exports were down 0.9% compared to 2017; imports: -3.1%. 

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U.S. softwood lumber export activity through the West Coast customs region represented the largest proportion (36.4% of the U.S. total), followed by the Eastern (31.3%) and Gulf (23.3%) regions. Moreover, Seattle (22.9% of the U.S. total) retook the lead over Mobile (12.6%) as the single most-active district. At the same time, Great Lakes customs region handled 65.2% of softwood lumber imports -- most notably the Duluth, MN district (27.3%) -- coming into the United States. 

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Southern yellow pine comprised 20.3% of all softwood lumber exports, Douglas-fir (15.8%) and treated lumber (9.9%). Southern pine exports were down 4.3% YTD relative to 2017, while treated: -13.2%; Doug-fir: -9.4%.

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.