Middle East conflict threatens American lumber market

In recent weeks, tensions between Israel and Iran have escalated, marked by missile attacks and the violation of a ceasefire agreement. This conflict has raised alarms within the global trade community, particularly concerning maritime routes. The Baltic and International Maritime Council indicated that shipping through the Strait of Hormuz and the Persian Gulf could face significant disruptions due to the ongoing hostilities. These waters are crucial, as they are responsible for the passage of approximately one-third of seaborne crude oil and 15% of refined oil products. Reports suggest that the U.S. sawmill industry is already feeling the impact of this conflict, experiencing a decline in orders from Middle Eastern customers. Mike Cardin, Chief Manager of Cardin Forest Products, expressed concerns that the situation could worsen, potentially halting any new orders for an indeterminate period. Prior to these developments, American wood products enjoyed a robust international market, with exports to various countries. However, the uncertainty surrounding President Trump's tariff policies has led foreign buyers to withdraw from purchasing American wood. Cardin stated that many buyers have proactively ceased orders, anticipating imposed tariffs on timber imports by the year’s end. As a result, most of Cardin’s current sales have shifted to domestic markets and Mexico, leaving him with an oversupply of stock in his warehouses. The lumber industry is experiencing not only the strains of international conflicts but also inflationary pressures, with wood product prices reported to have increased by 30% compared to pre-pandemic rates. Furthermore, the National Hardwood Lumber Association noted that China's reduction in purchases of U.S. hardwood began in 2017, underscoring the long-term challenges facing American lumber exports. As the situation evolves, the fate of the U.S. lumber industry hangs in the balance, with economic stability at stake amid geopolitical tensions.