Lumber prices are already high, and many predict they'll stay the same. How will it affect equipment purchases? To say the least, 2017 was an interesting year for the logging industry thanks to record-high lumber prices. Experts are signaling that these prices aren't expected to decrease anytime soon, so companies will have to find a way to work around them. With these price worries in mind, sales are still strong for logging equipment with industry forecasters already releasing the latest financial data from the most significant logging equipment lenders and buyers.
Let’s examine the causes for these sky-high lumber prices, along with the recent data from financial reporting firms on logging equipment’s strong 2018 start.
Import Duties Aren’t Going Anywhere
The primary driving factor causing these record-high prices was the initiation of new U.S. import duties on Canadian lumber back in November of 2017. The U.S. Department of Commerce ruled that total countervailing duties (CVD) and anti-dumping duties (ADD) of 20.83% would be levied on Canada's lumber exports which prompted Canadian lumber exporters to raise their prices in response. This resulted in higher prices across the board for everyone on the supply chain, all the way to the U.S. consumer.
Many are still uncertain how these high prices will affect the industry moving forward, but some predict that U.S. producers will start to look towards European importers in hopes to boost U.S. domestic lumber production.
EDA’s Latest Reports
Even though we’re only a few months into 2018, industry research experts at EDA have already released their financial data for forestry equipment financing. According to their data from February, these are the top five equipment buyers along with their location and the units they purchased:
- BLUE STAR EQT LLC DETROIT, MI 10
- LOGGING EQUIPMENT BANDIT 5
- LOGGING EQUIPMENT MORBARK 5
- TREESMITHS INC SPRING BROOK TWP, PA 5
- LOGGING EQUIPMENT ALTEC 5
Who financed the most equipment for the month? Well, EDA released this information as well:
- JOHN DEERE INDL CREDIT 78
- CATERPILLAR FIN SVC CORP 46
- DE LAGE LANDEN FIN SVC 25
- WELLS FARGO VENDOR FIN SVC LLC 18
- STEARNS BANK 15
Concern Over Softwood
Experts predict that if import duties stay the same, by the year 2020, there might not be enough available softwood lumber in North America to meet up with U.S. demand. This causes fears of a potential supply gap that could put United States builders in a tough position. Luckily, U.S. housing is entering a slow period which has put off the worries of a supply crisis for now, but importers and builders must find a way to work around these concerns before the issue becomes a major problem in a couple of years.
Growth in Latin America
In addition to the U.S. and nations in the Asia/Pacific region, many experts predict that countries in Latin America, particularly Brazil, will record larger increases in equipment purchases at around 6.5% each year on through 2019. This is great news for equipment manufacturers and financing companies alike if the predictions hold true.
