Economy and tourism performance could undermine Caribbean demand for softwood lumber

Global economic headwinds could weigh heavily on key markets throughout the Caribbean

Countries that rely on US and European tourism revenue are likely to welcome fewer visitors this year.

The Dominican Republic, a major consumer of Southern Yellow Pine, could be the hardest hit. Some traders are expecting demand from buyers there to fade halfway through the first quarter. The island is also a frequent destination for Russian tourists most years. It’s unclear how many have decided to spend their vacations elsewhere since the invasion of Ukraine.

Sales to Puerto Rico, Trinidad, and other smaller islands are likely to remain similar to volumes shipped in 2022.

Buyers in Jamaica are expected to be more active in the market this year after the significant price erosion during 2022 kept most cautious and concerned about downside risk.

The continued political and economic instability in Haiti will likely deter many exporters from shipping to that country in the foreseeable near term.

Prospects in historically smaller offshore markets for North American softwood lumber exporters were especially difficult for many observers to gauge this year. Analysts noted that shifting economic conditions, developments in the Ukraine war, and other factors could alter market dynamics significantly as the year progresses. The following are common observations about a few destinations.

Egyptian lumber exports dependent on financial health

Egyptian demand for US softwood lumber, primarily Southern Pine, was stronger in 2022 than an 18% decline in shipments through November would indicate. Volumes fell to 8.3 mmbf, but that represented 92% of total US exports to North Africa.

Further US shipments to Egypt outpaced exports to all European destinations last year. Growth in 2023 may depend heavily on traders’ ability to fund transactions amid myriad banking issues that bedeviled trade between the US and Egypt last year.

Pakistan growth in 2023 is not guaranteed

This country remains a Middle Eastern hub for some US exporters despite shipments declining for the last five years. US exports to Pakistan peaked in 2017 at 54 million board feet and have declined steadily ever since, slipping to a projected 16 mmbf last year. Prospects for growth in 2023 are tenuous.

But if economic conditions allow demand to regain its stride in the Middle East, Pakistan is widely anticipated to be a trading center in the region because US shippers have well established distribution networks in that country.

New Zealand Radiata pine exports look to increase

Radiata Pine exports from New Zealand to the US quietly increased 12% through November, climbing to a projected 103 mmbf last year. That would represent the largest volume since 2007, but only slightly higher than shipments over the previous five years.

Shipments from New Zealand are likely to shift modestly in 2023 compared to last year. If prices in the US continue to move closer to pre-pandemic levels, New Zealand exports may funnel larger volumes into Pacific Rim countries.

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