Hardwood analysis and trends

By David Mercker, Extension Specialist, Forestry

The past seven years have been a difficult (and transitional) period for the hardwood industry. Prices for hardwood lumber began dropping in 2005, three years before the onset of the recession. According to the USFS (Luppold 2102), in nominal prices, a composite of mixed Appalachian hardwood lumber indicates that the 2012 price is now equal to the 1992 price. In other words, we are back to where we were 20 years ago. The real price (inflation adjusted) is grimmer, showing that since 1967 (when such records were first collected), prices have never been lower. Lumber value has just not kept up with inflation.

The forest industry, including loggers and mills, have been able to survive such a colossal decline through efficiencies: bigger and more efficient equipment, better utilization of woody material, smaller work force, etc. Of course to this is added a very sharp attention to operational costs, such as fuel, insurance and supplies. Adjustments like these are not possible with forest landowners. Aside from well-timed thinnings and growing appropriate species for their site, there is very little that hardwood forest landowners can do make their tree growing enterprise more efficient. Clearly there is a limit to the speed that trees can grow, at least in a short planning horizon.

This is leading many small to mid-sized landowners to hold onto their timber rather than sell it. In turn, that puts additional supply pressure on loggers and mills. The availability of standing timber for sale is lean. Area mills routinely build log inventories in late summer and early fall to account for shortages when the winter weather turns awry. This year that goal is unmet for many mills.

By way of positive news, housing sales and starts have had modest improvement. Although progress is well off the pace of traditional numbers, it is in the right direction. This tick upward should continue as long as interest rates are low and inflation is in check. But both of those indicators will eventually jump, and if too much, could add additional pressure to the entire chain. Since the last issue of HAT, next to nothing has happened to hardwood lumber prices. Red and white oak, cherry, and maple lumber have flat-lined. Poplar is up slightly. Black walnut dropped 9 percent (which is not surprising as it is utilized for luxury items).

Bottom line: we need greater demand for lumber. And until that comes, prices will not increase significantly. Of course in today's economic environment, some would say that "sideways is the new up."

Summarized with permission of the Hardwood Market Report, Memphis, Tn.

Acetylated wood: Another new decking option

Adam Taylor, Associate Professor, Forest Products

In the past, options for decking lumber were limited to naturally durable wood species such as cedar and chemically-protected pine. Recently, new chemical formulations and new technologies such as wood-plastic composite and thermally modified wood have become available. Now there is a new product to add to the growing list of options: acetylated wood.

Lumber that is exposed outside needs to be protected from rot and insects. Some wood species such as cedar, cypress and white oak naturally are resistant to rot fungi, termites and other pests. The use of naturally-durable woods for applications such as decking lumber is the oldest option and remains a good choice. The most popular choice for decking lumber is southern pine that is protected with a chemical treatment (i.e. "pressure treated"). For many years there was only one chemical treatment used (CCA) but more recently a wide range of options has become available including ACQ, CA, micro-ACQ, micro-CA and EL. These various chemical formulations are expected to provide similar protection and treated pine is a relatively low-cost option. Unfortunately, treated pine is susceptible to warping and checking over time. Wood plastic composite, or WPC, is a commonly available but higher-priced option to wood decking. It is a mixture of thermoplastics and wood fiber that is extruded into decking and other shapes. It is not wood and thus does not warp and check like wood can.

Thermally-modified wood is more common in Europe but is beginning to be manufactured in the US. IN this process, dry lumber is heated in the absence of oxygen. The process darkens the wood and changes the chemical structure making the lumber less susceptible to warping and rot. It is relatively expensive but is promoted as an alternative to some premium tropical hardwoods.

Another recently commercialized decking alternative in the US is acetylated wood. One example manufactured by Eastman Chemical, a Tennessee-based company, is sold under the Perennial Wood brand (http://www.perennialwood.com/Pages/Home.aspx). The acetylation process involves pressure-treating dry lumber with a chemical and then heating the lumber, which causes the chemical to react with the wood. Acetylated wood remains its original color but has very low attraction to water, which greatly reduces its tendency to warp, check or rot. Acetylated lumber will be a premium product, roughly equivalent to WPC in price. However, it adds yet another option for homeowners using wood for exposed structures.

Bruce Steelman

614 Lehman Street

Phone:  615-563-2554

E:mail- tsteelm2@utk.edu