April - June, 2011
Market Brief
Sharply higher crosstie production, like we've seen in the past six months, would normally soften markets, but purchasing has been much stronger than almost anyone anticipated. Crosstie production by Railway Tie Association (RTA) members was 52% higher during the first four months of 2011 than during the same period in 2010. Even so, production in 2011 is still lagging purchasing volume. Consequently, the tie industry's inventory-to-sales ratio has steadily declined and is currently at its lowest level since December 2008, according to RTA. Most major tie yards and treating plants remain wide open for receipts, and we expect them to stay aggressive. It could take six months to a year to close the current gap between supply and demand. The longer-term outlook is also quite favorable, as several railroads have ambitious construction and improvement plans in the works. Barring fundamental changes in transportation markets, we expect crosstie demand to remain strong for several years.
Source: WoodLogics Hardwood Report