In September, Fastmarkets launched western softwood GMA Grade A pallet prices in six key delivered markets: Seattle, San Francisco, Los Angeles, Chicago, Dallas-Fort Worth and New York City. This price data and analytics service, the first of its kind in industry, can help any entity dealing with palletized cargo to understand how market shifts will impact their business.

Here, we take a look back on the first three months of price data to understand three key trends in the market and how these impact the price of pallets, an essential component of global supply chains.

Three key trends

• The results of the US presidential election, and President-elect Donald Trump’s subsequent tariff announcement
• Oversupply in the used pallet market
• Seasonal push across the holiday season

September pallet price data

The first edition of the pallet newsletter came as the Federal Reserve began its rate-cutting in September 2024, setting the stage for US housing starts to bounce back after July 2024 had the lowest housing starts since June 2020.

Overall, trends that dominated over the summer held as the bulk of unmodified or unenhanced GMA pallets in the Seattle market traded in an $11.00-13.00 per pallet range with premium GMA pallets trading in the $15.00-17.00 range. Over the course of September, market participants continued to report that those ranges remained in place for months. 

Producers reported persistently underwhelming production of new softwood GMA A-grade 48×40 pallets with ample availability for prompt delivery. Some sources reported a slight uptick in agricultural sector purchasing and some specialty manufacturers noted a pickup following the rate cut decision. However, the new GMA pallet sector continued to lag. Most producers reported that they did not expect a significant change this calendar year.

In most key delivered markets, mills continued to struggle against ample availability of $5.00-7.00 “good to average” condition used pallets. Market participants reported that used pallet inventories were diminishing, but estimates of these inventories were wide ranging. 

October pallet price data

In October, the National Retail Federation projected a 3% increase in holiday sales from the year prior, one of the first indications of how busy the 2024 holiday season would be. The October edition of the pallet newsletter analysed how this outlook would impact the market amid an increasingly saturated market for used pallets.

Alongside the forecasted holiday uptick, western softwood US pallet manufacturers continued to face steep competition from alternative species and an oversupplied used pallet market. 

Fastmarkets assessed pallets, western softwood, GMA A-grade delivered Seattle at $11.00-17.00 per pallet on October 30. This was unchanged from recent weeks. However, the other major market in the western softwood producing region, San Francisco, was another story. 

Fastmarkets assessed pallets, western softwood, GMA A-grade delivered San Francisco at $10.50-16.50 per pallet on October 30. This assessment reflects a -$0.75 decline to the low and high of the previous range.

While local low-grade lumber prices have remained fairly stable for the last month, competition from alternative species and a competitive used market resulted in some manufacturers lowering prices. Good quality used B-grade pallets and excellent quality block pallets were offered from $8-10 in the downtown San Francisco area.

Although most producers did not report changes in their assessments of the market, comparable erosion in asking prices were observed in Chicago, Los Angeles and Dallas-Fort Worth, with comparable B-grade and off-spec pallets available at competitive prices below recent western softwood basic unmodified GMA Grade-A 48×40 pallet rates.

At present, there is ample availability of new western softwood pallets on the market for prompt delivery. Low-grade western softwood producers reported that while agricultural and manufacturing purchases have picked up slightly in the last month, they have encountered resistance from pallet producers who are hemmed in by current market conditions.

Further complicating matters, tightness in the green Fir market pushed more western softwood pallet producers to the dry market. This corresponded with reports from dry low-grade manufacturers who recently noted a slight uptick in sales volumes to the pallet sector.

November pallet price data

The most recent edition of the newsletter followed the results of the US presidential election and President-elect Donald Trump’s tariff announcement, including insights into the lessons to be learnt from the fallout of Trump’s 2018 tariff increases.

Overall, western softwood US pallet manufacturers reported a seasonal uptick in demand as holiday retail sales picked up and buyers turned their attention to Q1 2025. Fastmarkets assessed pallets, western softwood, GMA A-grade delivered Seattle at $11.00-17.00 per pallet on November 27, unchanged from the previous month.

While producers benefited from an uptick in sales, recent pushback on prices due to the continued glut of used and lower-quality pallets stymied any significant upward momentum. The other major market in the western softwood producing region, San Francisco, also remained stable this month.

Fastmarkets assessed pallets, western softwood, GMA A-grade delivered San Francisco at $10.50-16.50 per pallet on November 27.

Competition from used and lower-quality pallets remained steep. Good quality used B-grade pallets and excellent quality block pallets were offered from $8-10 in the downtown San Francisco area.

Trading ranges narrowed in New York City and Dallas-Fort Worth as lower-priced Southern Yellow Pine hit the market.

Fastmarkets assessed pallets, western softwood, GMA A-grade delivered New York at $10.50-16.50 per pallet on November 27, a $0.75 decline to the low and a $1.75 decline to the high over the previous month.

Producers in these regions faced steeper competition from alternative grades in addition to lower-priced Southern Yellow Pine. Good quality B-Grade pallets were readily available at significant discounts, capping profits. Multiple producers reported switching to Southern Yellow Pine this month as it became more readily available.

In addition to the seasonal retail holiday spike, buyers reported that they are turning their attention to Q1 of next year. With a new administration and tariffs looming, numerous large pallet buyers decided to make extra purchases to prepare for an uptick as next year’s activity gets underway.

Conclusion

The first three months of pallet price data was influenced by the used pallet market, which has been in a state of oversupply in recent months. Competition from the used pallet market resulted in some manufacturers lowering prices.

The results of the US presidential election have also had a significant impact on market sentiment following President-elect Donald Trump’s announcement of planned tariffs for on imports to the US from certain countries.

Finally, holiday retail sales have continued to pick up over the last three months. The 2024 holiday season is shaping up to be the busiest since 2021, driven by record spending forecasts and a projected 3% increase in holiday sales from the year prior, according to the National Retail Federation.

At Fastmarkets, our price data, analysis and forecasting helps you to navigate dynamic markets and stay ahead of price fluctuations. Speak to one of our experts today to find out more.

The post Three key factors impacting our pallet price data appeared first on Fastmarkets.

With tariff implementation potentially a few months away, industry stakeholders are scrambling to prepare for the potential challenges ahead, including navigating port efficiency concerns and facing rising costs across supply chains. However, the changes will also bring opportunities for supply chain managers, manufacturers and freight companies.

This month’s edition of the newsletter includes

• Our latest pricing data for western softwood, GMA A-grade pallets
• Insights into how President-elect Donald Trump’s tariff announcement could impact the market, including comparisons to the 2018 tariffs
• Analysis on how the wider global economic uncertainty will influence costs

Interested in early access to our prices and analysis? Sign up to the pallet prices newsletter to be the first to receive them.

Pallet pricing trends

Western softwood US pallet manufacturers reported a seasonal uptick in demand as holiday retail sales picked up and buyers turned their attention to Q1 2025.

Fastmarkets assessed Pallets, western softwood, GMA A-grade delivered Seattle at $11.00-17.00 per pallet on November 27, unchanged from the previous month.

While producers benefited from an uptick in sales, recent pushback on prices due to the continued glut of used and lower-quality pallets stymied any significant upward momentum. The other major market in the western softwood producing region, San Francisco, also remained stable this month.

Fastmarkets assessed Pallets, western softwood, GMA A-grade delivered San Francisco at $10.50-16.50 per pallet on November 27.

Competition from used and lower-quality pallets remained steep. Good quality used B-grade pallets and excellent quality block pallets were offered from $8-10 in the downtown San Francisco area.

Trading ranges narrowed in New York City and Dallas-Fort Worth as lower-priced Southern Yellow Pine hit the market.

Fastmarkets assessed Pallets, western softwood, GMA A-grade delivered New York at $10.50-16.50 per pallet on November 27, a $0.75 decline to the low and a $1.75 decline to the high over the previous month.

Producers in these regions faced steeper competition from alternative grades in addition to lower-priced Southern Yellow Pine. Good quality B-Grade pallets were readily available at significant discounts, capping profits. Multiple producers reported switching to Southern Yellow Pine this month as it became more readily available.

In addition to the seasonal retail holiday spike, buyers reported that they are turning their attention to Q1 of next year. With a new administration and tariffs looming, numerous large pallet buyers decided to make extra purchases to prepare for an uptick as next year’s activity gets underway.

As Fastmarkets ramps up its coverage of the pallet market, we invite feedback on specific pallet-related items for future reports. Contact ian.templeton@fastmarkets.com with comments or to contribute future pricing information.

Tariffs, trade and supply chain dynamics: A renewed challenge for 2025

The US trade landscape is once again bracing for disruption, with echoes of the sweeping tariffs introduced in 2018. During that period, Donald Trump’s administration imposed tariffs aimed at reducing the trade deficit and protecting domestic industries, including a 25% levy on steel and 10% on aluminum imports. These policies, largely targeting China, eventually escalated to cover over $250 billion worth of goods, sending shockwaves through supply chains and reshaping freight markets. Now, with new Trump tariffs on the horizon, the industry faces familiar challenges—but in an even more volatile global environment.

When the tariffs hit in 2018, businesses rushed to import goods ahead of the increased costs, triggering freight frontloading on an unprecedented scale. Shipping rates soared—ocean container rates alone jumped by over 70%, according to Xeneta. Ports buckled under the strain, particularly in Long Beach and Los Angeles, where congestion brought delays and bottlenecks.

We may be heading for a similar scenario, with transportation company C.H. Robinson warning that new tariffs could take effect as early as late February or early March, leading to another wave of frontloading as companies seek to avoid higher costs. With port labor uncertainty already a concern, Southern California ports could once again see surges in activity and delays.

One of the unexpected outcomes of the 2018 tariffs was their short-term benefit to the freight industry. The rush to move goods before tariffs took effect created tight trucking capacity, higher rates, and stronger volumes, resulting in a banner year for many transportation companies. But that boost came at a cost. By 2019, freight markets slowed as demand softened and rates fell—not just in trucking, but also in rail and intermodal sectors. If history is any guide, a similar boom-and-bust cycle could play out in 2025.

For the pallet industry, tariffs are not just a macroeconomic concern—they directly affect costs. Components like nails, many of which are imported, are already subject to steep tariffs. Further increases could push costs higher in an industry that operates on razor-thin margins. Any added expenses are likely to be passed down the supply chain, affecting manufacturers, retailers, and end-users.

ILA strike: A standoff over automation and its ripple effects

The recent strike by the International Longshoremen’s Association (ILA) remains a critical focal point in logistics managers’ short-term outlooks. The three-day strike in October sent shockwaves through the logistics network, with congestion that took weeks to unravel. Everstream Analytics reported that the number of container ships waiting outside ports jumped from 5 to 54 by the strike’s end on October 4.

The deadline for a settlement was delayed to January 15^th and one of the core issues at the heart of the ILA’s dispute is automation. The union is staunchly opposed to the development of fully automated terminals—a stance that is enshrined in their existing contract, which bans equipment devoid of human interaction. While the US Maritime Alliance (USMX) has offered to maintain this language as a concession, automation remains a thorny subject.

President-elect Donald Trump’s pro-union position adds another layer of complexity. Despite his broader agenda to boost US competitiveness, which could benefit from port automation, Trump has expressed support for the ILA’s anti-automation stance. During a meeting at his Mar-a-Lago resort last fall, he promised to back the union on this issue. This alignment presents a paradox: improving efficiency at US ports is crucial for competing on the global stage, yet resistance to automation keeps US facilities lagging behind. The ports of Long Beach and Los Angeles, for instance, ranked 373rd and 375th out of 405 in the World Bank’s 2023 Container Port Performance Index. Considering these two ports handle about 29% of all containerized international waterborne trade in the US, their low efficiency is a significant concern.

As we continue rolling out our cost model, now in its second month, we’re providing detailed insights into the gross variable cost of producing a new western softwood GMA A-grade stringer pallet across six key metro hubs. This model highlights a side-by-side comparison of costs depending on whether #3 or #4 grade lumber is used in production.

The model is based on the availability of softwood lumber and takes into consideration the delivery cost from the mill to the pallet facility, which is partly why we see a lower cost in Seattle and a slightly higher cost in Chicago.

We must caveat that while certain manufacturers will have lower costs due to a higher utilization of automation, these are our estimated averages for each of the metro hubs.

Moreover, the total cost for each hub is calculated by adding the lumber cost and labor cost, which are labeled for each metro hub, alongside a nail cost that is uniform across the country, and miscellaneous costs, including smaller items such as gas, electricity, paint, and staples.

We’ve observed steady price increases across all six metro hubs, reflecting the rise in lumber prices seen in October and November. This trend, potentially a harbinger of what’s to come in 2025, offers some welcome relief for pallet manufacturers.

As Fastmarkets expands its coverage of the pallet market, we invite feedback on our analysis and insights. Contact antonio.gallotta@fastmarkets.com with comments.

Pallet industrial production index being propped up by recycled pallets

FRED data indicates that the pallet industrial production index declined by 1.1% from September to October 2024. Though we’d likely expected a lower index level given the current market conditions, it’s important to remember that this index aggregates both new and recycled pallets—recycled pallets continue to support higher overall numbers.

The subdued production of new pallets reflects producers’ reluctance to increase output. Elevated supply levels across the country have kept prices suppressed, prompting manufacturers to wait for inventories to decline before ramping up production.

Pallet wages begin to rise again

Despite pallet wages having stayed relatively stable since 2023, another small surge in labor costs can be seen more recently, with wages rising 3.6% from June 2024 to September 2024 (October’s figures haven’t been released yet). However, this pales in comparison to the wage growth seen during the pandemic.

The slower growth in pallet wages provides some relief to pallet producers, who previously faced reduced margins due to skyrocketing labor costs following the record-high pallet prices during the pandemic. Labor shortages and wage pressures have also accelerated the adoption of automation among manufacturers, with automated pallet nailing machines and dismantlers becoming more widespread.

Pallet producer price index sees first positive gain in two years

This graph of the Pallet Producer Price Index shows the gradual decline in pallet prices since the highs of early 2022. The peak pricing followed a period of extreme volatility driven by a combination of pandemic-era home renovation spikes, increased demand, and sawmill disruptions. Prices rose approximately 60% from May 2020 to April 2022.

The recovery process has been slow, reflecting a return to stable supply and adjustments by producers who initially ramped up capacity during the highs of Covid which created a supply glut. The fall in prices has been prolonged and as can be seen by the rate of change on the right, it has slowly plateaued and October 2024’s figures showed its first rise in pallet prices since April 2022, partly attributed to the mill closures seen earlier this year starting to effect.

Framing lumber’s rally signals optimism for low-grade prices in 2025

As we’ve mentioned in previous editions and exemplified by the two indices having a high correlation, we also incorporate framing lumber as it’s long been a leading indicator of low-grade lumber.
Framing lumber prices rallied in October as supply tightened due to Hurricane Helene disruptions, declining Canadian production, and disaster repair activity boosting demand. The Random Lengths FLCP averaged $397 per MBF, the highest since April, and is expected to rise further in November before softening in Q1 2025. Southern Yellow Pine prices are already correcting as supply rebounds, while Canadian mills face rising duties, projected to reach 30% by 2025, adding financial strain. Despite short-term volatility, 2025 looks brighter, with the FLCP forecasted to climb to $441 per MBF, its highest nominal level since 2018 (excluding 2020-22).

The rise in framing lumber prices is expected to drive an uptick in low-grade lumber prices, with market conditions in 2025 projected to be significantly more favorable than the past two years. This outlook is underpinned by anticipated market tightness in early 2025, particularly if a prolonged ILA strike disrupts pallet sourcing, as well as a gradual easing of interest rates. However, the pace of rate reductions may be slower than previously expected due to recent spikes in 10-year Treasury yields and mortgage rates driven by tariff uncertainty. As a result, low-grade lumber prices are forecasted to reach $312 per MBF in 2025.

Housing market steady, but rising rates add uncertainty

Housing starts dipped slightly in October, but multifamily housing starts rebounded by 10% to 340,000 after a sharp 22% drop in September compared to July. Despite this rebound, multifamily starts averaged 340,000 over the August-October period, down 4.2% from the previous three months and 15% below the year-ago pace, while single-family starts showed a modest upward trend, averaging 1.0 million units annually—6.4% higher than the prior three months and 4.5% above last year. Permits remained steady, signalling solid activity in the final months of 2024.

This uptick in single-family construction lifted the NAHB HMI in November to 46, driven by a six-month sales outlook rising to 64. Confidence among homebuilders likely grew after the clarity of a Trump re-election, with regulatory reform expectations offsetting the limited federal role in boosting home construction. However, as mentioned above, the Trump victory has unsettled the bond market, driving sharp increases in the 10-year Treasury yield and mortgage rates due to tariff uncertainty, as well as stricter immigration enforcement, and shifts in fiscal policy. This market turmoil, alongside the Federal Reserve’s cautious stance on rate cuts, has prompted a re-evaluation of housing market projections.

Want to learn more about the pallet market and the factors influencing it? Sign up to the newsletter to be the first to see our prices and access our insights and analysis.

The post Uptick in holiday and Q1 2025 demand balanced in East by lower-priced Southern Pine appeared first on Fastmarkets.

Launched in September 2024, Fastmarkets now publishes western softwood GMA Grade A pallet prices in six key delivered markets: Seattle, San Francisco, Los Angeles, Chicago, Dallas-Fort Worth and New York City. Leveraging our existing Random Lengths dimension lumber data expertise, we are perfectly positioned to offer the first coverage of the US pallet market by any price reporting agency (PRA).

Grocery Manufacturers Association (GMA) pallets are the most common pallet size in the United States. While dimensions on the marketplace vary, the specifications for Fastmarkets western softwood GMA Grade A delivered prices are as follows:

• Western softwood of any species
• A Grade (also referred to on the market as #1), which consists of new construction in good condition
• An overall footprint of 48” by 40”
• Four-way forklift entry with two notches on the side
• Top and bottom deck boards are a minimum of 1/2 inch thick
• A 5 1/2″ x 40″ board on each end of the pallet top, and five 3 1/2″ x 40″ boards in the center
• A 5 1/2″ x 40″ board on each end of the pallet bottom, and three 3 1/2″ x 40″ boards between the notches

You can learn more about our pallet pricing and analytics services by accessing the recording of our recent webinar, The evolution of the pallet supply chain

Fastmarkets launched the pallet newsletter this September in response to high levels of inquiry into pallet pricing by our existing customer base. The number of wood pallets in circulation continues to grow with recent estimates of the total Central and North American market size sitting around 3 billion. Considering a combined total population of the US, Canada and Mexico of around 496 million people – that’s six pallets per person!

While the pallet market’s size is immense, up to the present accurate pricing data and analysis has been hard to come by. Fastmarkets is in a unique position to add transparency and value to the market. Around 80% of the pallet market now utilizes softwood lumber and Random Lengths (a Fastmarkets company) is the industry leading dimension and low-grade lumber benchmark publisher.

The six delivered markets were chosen after several rounds of feedback from western softwood lumber producers. The prices are published in a range. Notably, extremely poor quality and highly modified or premium pallets, while considered as indicators, are not included in the final published range.

Separate benchmarks will be considered on an ongoing basis in order to add more clarity to the current state of the GMA Grade A markets. The publication of used pallet prices will be considered as well. Additionally, Fastmarkets recently acquired the industry leading Hardwood Market Report. Hardwood pallet prices will be coming soon!

GMA pallets are utilized by a wide variety of industries with most sectors of the economy interacting with them on some level. Fastmarkets pallet data and analytics is an excellent resource for pallet manufacturers, pallet traders, the manufacturing sector, the agricultural sector, and any entity dealing with palletized cargo.

Being clear about our price assessment and index process is important. You can be confident that our pricing process is impartial, market-reflective and market-aligned. At Fastmarkets, our core methodology and expertise has defined us for more than 130 years. We pride ourselves on being transparent with our clients about how we assess our prices, so we publish every single methodology and price specification that our pricing teams use.

Verified

Our price reporters are required to follow robust pricing procedures, clearly defined methodologies and price specifications during their market reporting and pricing sessions. All calculations or assessments are verified through our integrated peer review system, to guarantee unrivaled quality control and compliance.

Independent

We continually develop and review our methodologies in consultation with industry participants. Our aim is to adopt product specifications, trading terms, conditions or other factors that reflect and are representative of typical working practices in the industry.

Confidential

Markets are assessed by experienced price reporters each day, via phone calls, emails, texts, etc to a wide variety of market participants on both the buy and sell sides of the market. All information received from data submitters is kept confidential in accordance with the data submitter policy (see the section marked “confidentiality”).

All data supplied to Fastmarkets is kept confidential in accordance with the data submitter policy and stored in our secure online pricing database system MInD (Market Information Database). Fastmarkets may sign a Data Submitter Agreement (DSA) with any data provider, if requested to do so, to maximize the number of data points collected for inclusion in the assessment process.

In addition to the foregoing internal methodology, Fastmarkets is independently and regularly audited by the third-party International Organization of Securities Commissions (IOSCO). IOSCO principles create an overarching framework for benchmarks, articulating guidance and principles ensuring transparency and openness. The assurance review process examines a firm’s governance and controls framework, policies, and methodologies in scope to verify their adherence to the PRA Principles.

Interested in learning more about the Fastmarkets pallet pricing and analytics? Watch the recording of our recent webinar, The evolution of the pallet supply chain

The post Pallet prices 2024: Stay informed with Fastmarkets data appeared first on Fastmarkets.

Amid localized challenges, broader market dynamics further complicate the outlook for western softwood pallet producers. The sector faces significant supply chain constraints, driven by high import volumes and logistical bottlenecks.

As the industry braces for seasonal strains and anticipates shifting market conditions, the response to these pressures will be crucial in shaping the future of softwood pallet production in the region.

This pallet pricing newsletter includes:

• Insights into changing regional prices compared to September’s assessments
• The impact of the 2024 holiday season, which is set to be the busiest since 2021
• Expert analysis on changes in pallet production and wages
• How macroeconomic headwinds are impacting the market

Interested in early access to our prices and analysis? Sign up to the pallet prices newsletter to be the first to receive them.

Pallet trading prices

Western softwood US pallet manufacturers continued to face steep competition from alternative species and an oversupplied used pallet market. 

Fastmarkets newly assessed Pallets, western softwood, GMA A-grade delivered Seattle at $11.00-17.00 per pallet on October 30. This was unchanged from recent weeks. However, the other major market in the western softwood producing region, San Francisco, was another story. 

Fastmarkets assessed Pallets, western softwood, GMA A-grade delivered San Francisco at $10.50-16.50 per pallet on October 30. This assessment reflects a -$0.75 decline to the low and high of the previous range.

While local low-grade lumber prices have remained fairly stable for the last month, competition from alternative species and a competitive used market resulted in some manufacturers lowering prices. Good quality used B-grade pallets and excellent quality block pallets were offered from $8-10 in the downtown San Francisco area.

Although most producers did not report changes in their assessments of the market, comparable erosion in asking prices were observed in Chicago, Los Angeles, and Dallas-Fort Worth, with comparable B-grade and off-spec pallets available at competitive prices below recent western softwood basic unmodified GMA Grade-A 48×40 pallet rates.

At present there is ample availability of new western softwood pallets on the market for prompt delivery. Low-grade western softwood producers reported that while agricultural and manufacturing purchases have picked up slightly in the last month – they have encountered resistance from pallet producers who are hemmed in by current market conditions.

Further complicating matters, tightness in the green Fir market has pushed more western softwood pallet producers to the dry market. This corresponds with reports from dry low-grade manufacturers who recently noted a slight uptick in sales volumes to the pallet sector.

As Fastmarkets ramps up its coverage of the pallet market, we invite feedback on specific pallet-related items for future reports. Contact ian.templeton@fastmarkets.com with comments or to contribute future pricing information.

New cost model for GMA A-Grade stringer pallet

We’re delighted to announce our new cost model detailing the gross variable cost for new western softwood GMA A-grade stringer pallet across six key metro hubs, with a side-by-side comparison of what it would cost depending on whether you use #3 or #4 grade lumber to produce the pallet.

The model is based upon the availability of softwood lumber and will factor into consideration the delivery cost from the mill to the pallet facility, which is partly why we see a lower cost in Seattle and a slightly higher cost in Chicago.

We must caveat that while certain manufacturers will have lower costs due to a higher utilization of automation, these are our estimated averages for each of the metro hubs.

Moreover, the total cost for each one is reached by adding the lumber cost and labor cost, which are labeled for each metro hub, alongside a nail cost which is uniform across the country, and miscellaneous costs which include smaller items such as gas, electricity, paint, and staples.

Holiday season supply chain strain

The holiday season is shaping up to be the busiest since 2021, driven by record spending forecasts and a projected 3% increase in holiday sales from the year prior, according to the National Retail Federation. Despite a temporarily settled labor dispute on the East and Gulf Coasts, supply chain challenges persist, with high import volumes redirected to the West Coast ports like Los Angeles and Long Beach.

These diversions, coupled with delays in freight rail, have led to increased dwell times—up to nine days in some cases. As containers wait for rail capacity, companies may incur higher logistics costs, often turning to trucking to bypass bottlenecks, driving up overall transportation expenses. For the pallet market, this could translate to increased prices as businesses prioritize pallets for stockpiled goods and anticipate future disruptions. 

The situation is further complicated by a reduction in trucking capacity, as company exits have outpaced new additions since October 2022, according to data from the Federal Motor Carrier Safety Administration. With this loss of trucking firms, bottlenecks are expected to worsen as freight struggles to move efficiently.

Industry players, including DHL, are advising clients to reroute rail-bound freight back to the East Coast. Moreover, as the International Longshoremen’s Association continues to hold firm on automation issues, and with a critical January 15 deadline looming, there’s potential for renewed strike actions that could exacerbate these logistical challenges into the new year.  

The resulting constraints may create a shortfall of pallets on the West Coast, as increased demand and limited capacity put pressure on suppliers and lead to higher pallet prices. Pallets from US international trade arriving through container have increased steadily since March 2024 as seen below, in part due to provisions made by logistics managers to get goods in before the October strike deadline.  

Pallet industrial production index decline 

FRED data shows that the pallet industrial production index has fallen 5.9% from July 2024 to September 2024, in line with the volatility we’ve seen in this index since the start of 2024, although still relatively high for the figures seen in the last 18 months. 

This is reflective of conflicting forces in the pallet market of large manufacturers with a strong network of facilities having steady production, but smaller manufacturers that have struggled in the face of smaller margins due to low prices and higher costs exiting the market. 

Pallet wages remain stable in 2024

With respect to wages in the pallet industry, their growth outpaced the growth of wages in the manufacturing sector at large from the pandemic up until 2023, though since then there has been relatively little increase in pallet wages which has allowed manufacturing wage growth to catch up. Pallet wages grew by 30% from March 2020 to September 2023 whilst overall manufacturing earnings grew by 18% over the same period, but since then wage growth has been 0.3% and 5.1% respectively. 

This is significant, as it offers some relief to pallet producers who endured sharply reduced margins following the decline from record-high pallet prices seen during the pandemic, which we in part mentioned above. Though wages have largely levelled since 2023, there has been a steadily upward trend in wages since March 2024 so wages figures in subsequent months will be keenly watched. 

As Fastmarkets expands its coverage of the pallet market, we invite feedback on our analysis and insights. Contact antonio.gallotta@fastmarkets.com with comments.

Hurricane impact on lumber and pallet markets

Hurricane disruptions across the US South have heightened market tension, with both temporary curtailments and some permanent or indefinite mill closures affecting lumber supplies.

With inflation easing, interest rates have finally stabilized and are expected to trend downward through year-end as the Federal Reserve adopts a more balanced approach to its dual mandate of price stability and full employment.

This shift could serve as a catalyst for growth in single-family housing construction, reversing recent momentum losses, and easing financing constraints in multifamily development. Assuming inflation and interest rates remain favorable, the foundation for a demand recovery in lumber appears strong. 

This is a notable tailwind that will feed downstream into the pallet industry because, as noted in the first edition of the newsletter, framing lumber has long been a leading indicator for low-grade lumber which is primarily used in pallet manufacturing. 

Pallet producer price index sees encouraging signs

The Pallet Producer Price Index data indicates that while prices continue to decline from their 2022 highs, the rate of deceleration has eased in recent months—an encouraging sign for the industry. The percentage change is steadily approaching positive territory, signaling potential stabilization. 

This trend aligns with the rebounding housing market, which is expected to have positive ripple effects across the lumber industry. As reflected in the forecast above, we anticipate a steady increase in prices heading into 2025, supported by renewed demand from housing and construction sectors. 

September housing starts remaining steady

Housing starts remained relatively steady in September, with minimal change from the previous month. According to the Census Bureau, housing starts reached 1.354 million units (seasonally adjusted annual rate), a slight 0.5% decrease from August. Notable revisions were made to prior months, with July and August figures collectively revised up by 30,000 units from the August report. Regionally, the Northeast saw the largest growth, with starts increasing by 58% over the previous month.

Overall in the US permits dropped by 2.9% from August, indicating a likely slowdown in October, especially with the disruptions caused by Hurricanes Helene and Milton.

Want to learn more about the pallet market and the factors influencing it? Sign up to the newsletter to be the first to see our prices and access our insights and analysis. We provide a range of market intelligence, including short-term forecasts, price data and market coverage to keep you one step ahead of the market. Speak to our team and find out more today.

The post New western softwood pallets struggle against alternative species and used market appeared first on Fastmarkets.

While the sector continues to recover from the retrenchment in 2023, new opportunities and challenges are emerging, from evolving market dynamics to the impacts of trade and labor disruptions. 

Our first pallet pricing newsletter includes:

• Insights into the headwinds impacting pallet trading prices, including the Federal Reserve rate cut and a pick up for specialty pallets
• Crucial context into the rate of pallet production in recent years and how the volatility in the market has impacted prices
• A new pallet supply measure which tracks pallets flowing in and out of the US market via containerized trade
• Our short-term forecast for the market

Interested in early access to our prices and analysis? Sign up to the pallet prices newsletter to be the first to receive them.

Pallet trading prices

Recent trends held this month as the bulk of unmodified or unenhanced GMA pallets in the Seattle market traded in an $11.00-13.00 per pallet range with premium GMA pallets trading in the $15.00-17.00 range. Market participants continued to report that these ranges have remained in place for months.  

Producers reported persistently underwhelming production of new softwood GMA A-grade 48×40 pallets with ample availability for prompt delivery. Some sources reported a slight uptick in agricultural sector purchasing and some specialty manufacturers noted a pickup following the rate cut decision. However, the new GMA pallet sector continues to lag. Most producers report that they do not expect a significant change this calendar year.  

In most key delivered markets, mills continued to struggle against ample availability of $5.00-7.00 “good to average” condition used pallets. Market participants reported that used pallet inventories were diminishing, but estimates of these inventories were wide ranging. 

As Fastmarkets expands its coverage of the pallet market, we invite feedback on specific pallet-related items for future reports. Contact ian.templeton@fastmarkets.com with comments or to contribute future pricing information.

A volatile market

Pallet production has been a highly volatile market over the last decade, but it is showing signs of life after retrenchment in 2023.

According to FRED data, the production index for pallets rose 18% from March 2020 to its highest point in December 2021 before steadily falling again once the pallet market became saturated. However, more recently, the production index has risen by 10% from July 2023 to July 2024.

That said, it should be noted that the methodology for this index does not differentiate between new and recycled pallets. Market indicators including industrial hardwood and low-grade softwood lumber demand point to the conclusion that most of this increase in pallet production has been on the recycled side of the market rather than the new side. 

The recent weakness in new pallet production means that the stock of existing pallets in use and on the market will degrade in quality on average. The condition of pallet cores will deteriorate and more pallets reach the end of their useful life. Pallet recycling activity will wane and the currently low prices will creep up. Eventually, prices will increase enough for new pallet production to climb again to meet market demand. 

Prices continue to ease

The US Bureau of Labor Statistics (BLS) reported that the pallet producer price index (PPI) rose 60% from March 2020 to April 2022.  

The fall from the highs of April 2022 has been far slower compared to the rapid price spike seen during the pandemic, with this downturn being more prolonged than many smaller pallet manufacturers have been able to weather as this has greatly diminished margins. Indeed, many closures have been reported due to low pallet prices and high wages becoming unsustainable. This reduced supply capacity will in turn create volatility in the medium term. 

However, we envisage that the manufacturers able to weather the perfect storm of a supply glut, low prices and high wages stand to gain significant market share. While the industry has been torrid lately, the largest players with reliable networks and economies of scale have seen sizeable growth. For example, PalletOne, the USA’s largest pallet manufacturer, reported a 10% increase in unit sales in Q2 compared to the year before, whereas industrial production in the pallet industry rose 6% during the same period. 

Pallet producers have also contended with higher labor costs than other manufacturing sectors. According to the BLS, wages in the pallet industry grew by 30% from March 2020 to September 2023 whilst overall manufacturing earnings grew by 18% over the same period.

Wages in the pallet industry have plateaued since then but continue to be a pressure point, with the National Wooden Pallet and Container Association (NWPCA) producing a report where 74% of manufacturers identified attracting and retaining a quality workforce as their top challenge. 

Grade lumber price trends lead low-grade ones 

Framing lumber has long been a leading indicator for the low-grade lumber used to manufacture pallets, with a correlation of 0.97 between 2019 and 2024.

This partly explains the pricing volatility we saw during the pandemic, with the framing lumber used for residential construction soaring once the housing market picked up at the end of 2020 and people started looking for more space outside of big cities, buttressed by more disposable income and suppressed interest rates.  

As a result of the way framing lumber is made in sawmills, low-grade lumber will always be produced as a by-product and thus explains their correlation. The low-grade lumber composite price peaked at $1018/MBF in March 2021 due to the high value of framing lumber during the same period, seeing the same subsequent fall and rise before the more gradual easing seen since the end of 2022.

As our forecast shows, we expect the price of both framing lumber and low-grade lumber to steadily increase into 2025. 

US housing starts set to bounce back

As low-grade lumber is closely related to framing lumber, housing starts are a key statistic for the pallet market and are closely watched as a harbinger.

Since the Fed began raising rates, the housing market has remained subdued. Home prices have remained elevated and those who locked in low mortgage rates at the start of the pandemic have had little incentive to buy.  

July 2024 had the lowest housing starts since June 2020, partly due to low demand but also as a result of poor weather conditions seen across the country such as record-breaking heat across much of the West and Hurricane Beryl in the South, the two regions that account for the vast majority of new home construction.

August 2024 saw a strong rebound in response to the low housing starts seen the previous month, and we expect this rebound to continue heading into 2025 as the low mortgage rates from the pandemic begin to expire and with the Federal Reserve beginning their rate-cutting in September 2024. 

Trade as a key metric

Despite being a smaller section of the overall pallet supply, the net inflow of pallets rose from 0.9 million in March 2020 to 8.7 million in July 2022, exacerbating the oversupply of pallets in the US and further driving down the price of pallets.

They’ve begun to surge again in 2024 as imports have risen while exports have remained relatively constant and this will likely continue to be the case for the remainder of 2024 due to the busy imports period in the lead up to Christmas, and as logistics managers tried to rush goods in before the potential dockworkers’ strike on October 1.

While the exact length and severity of the strike is tough to predict, if it does come to pass it could lead to a surge in pallet prices in some regions as they rush to fill the gap in the pallet pool that the strike would cause.  

At the time of writing, the International Longshoremen’s Association (ILA), which represents 45,000 dock workers at three dozen U.S. ports from Maine to Texas and handles almost half of the nation’s ocean trade, was still in a deadlock with the US Maritime Alliance (USMX). The dispute stems from the USMX’s insistence that ports begin to automate which would lead to some job losses, as well as reports that the ILA are proposing a 77% pay increase over the next 6 years of their contracts.  Repercussions have already begun to be felt at ports on the West Coast, with the West’s dockworkers having already settled their contracts the year before and thus will pick up some of the trade volume from the East Coast. 

Concerns of a bottleneck on the West Coast have grown as supply chain managers begin to reroute their goods to ports on the West Coast. California’s two largest ports, Los Angeles and Long Beach, saw their combined inbound container volume surge 47% in July from the same month last year and rise another 3% from July to August, with Long Beach reporting its best month on record for imports. However, given that ILA ports make up 43% of US imports, according to Freightos, West Coast ports won’t be able to handle all the additional goods being redirected. 

As Fastmarkets expands its coverage of the pallet market, we invite feedback on our analysis and insights. Contact antonio.gallotta@fastmarkets.com with comments.

Another consideration is how the White House might respond to a strike. The White House has so far ignored pleas from scores of trade groups to intervene, but this may change once the strikes get closer due to the effect this would have on the economy.  

Looking further ahead to how the election could affect the pallet supply, we envisage that if a Trump presidency occurs we can expect a surge in imports between November and January in anticipation of the tariffs he has said he’ll impose, potentially causing more price volatility for pallets as closures for sawmills begin to mount.

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Following a massive price hike during the COVID-19 pandemic, the pallet market has struggled to regain its footing. With historically low prices for finished pallets and a glut of recycled pallets, production of new pallets has sagged. Traders have sensed a bottom of late, as more producers are declinging counters. However, a true recovery and production boon remains uncertain.

The US agriculture market also continues to face a decline in farm income as producers have struggled to keep up with cost inflation. According to the USDA 2024 Farm Sector Income Forecast, total inflation-adjusted cash receipts (for both cash crops and animal products) are forecast to fall $32.2 billion (6.2%) from 2023 to $485.5 billion in 2024. With the number of farms decreasing due to both consolidation and real estate development, the sector has looked to interest rate cuts, regulatory overhauls, and subsidies as paths to an improved market.

The oft-debated manufacturing sector also remains muted from a low-grade perspective. According to the Federal Reserve, domestic manufacturing production, sales, work started, and orders index, the sector has maintained a steady pace from 2011 to the present, excluding a sharp decline and then recovery during the pandemic. Low-grade producers servicing the manufacturing sector have reported little change in consumption.

With all key drivers of low-grade demand muted and prices relatively low compared to recent years, trading ranges have widened. Several items have maintained $50-plus spreads in reported levels between equally graded products. Market participants on both sides of the table cite the significant variances in low-grade quality and a willingness to pay a premium or offer a discount to account for these spreads. 

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INCORRECT PRICE: $920

CORRECTED PRICE: $935

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Volatility has once again returned to refined nickel premiums in Europe, with uncut cathode and briquette premiums rising as the market continues to diverge in terms of direction.

The continued weakness in LME nickel has encouraged some consumers to return to the market, with a number of spot offers and deals reported to Fastmarkets.

The biggest movement was in uncut cathode premiums, which rose sharply amid higher offers and assessments from market participants.

Fastmarkets assessed the nickel uncut cathode premium, in-whs Rotterdam at $400-1,000 per tonne on Tuesday March 14, an increase of $150/t at the top of the previous range, which was assessed on March 7.

There were other offers heard that were significantly above the new top of the range, but no liquidity was confirmed at such levels, capping the increase for now, Fastmarkets heard.

Market participants noted a general tightness in the market for uncut cathode in the region, which pushed premium levels higher for some brands of material.

This tightness is currently reflected in the LME warehouse stock levels within the region, where there are just 6,012 tonnes of uncut cathode on-warrant in LME sheds in Rotterdam.

The move further widens the premium range, which is already significantly broader than historical averages, with market participants continuing to note distinct differences in regional brand valuations.

Uncut cathode premiums are now at their highest level since September 27, 2022.

Elsewhere, following higher liquidity, briquette premiums in the region also increased.

Fastmarkets assessed the nickel briquette premium, in-whs Rotterdam at $450-880 per tonne on Tuesday, an increase of $80 per tonne at the top of the previous range, which was assessed on March 7.

Several market participants indicated that premium levels could be as high as $1,000 per tonne in the region, but there was little buying interest at these levels, Fastmarkets heard.

There was one deal above the previous range, which supported the move upward, and this was reported to Fastmarkets.

Market participants noted that briquette demand remains robust globally, keeping supply tight, although many were keeping a close eye on developments in Asia, where steady outflows of material are happening amid a low-premium environment.

Briquette premiums are now at their highest level since November 22, 2022.

Rounding out the premiums in the region, 4×4 cathode premiums were steady amid illiquidity.

Fastmarkets assessed the nickel 4×4 cathode premium, in-whs Rotterdam at $800-1,300 per tonne on Tuesday, unchanged from a week prior.

Thin availability of cathodes and constrained cutting capacity in the region continue to underpin historically high premiums.

United States reports quiet period for nickel prices

US nickel premiums were flat again amidst quiet activity in the week to Tuesday.

Fastmarkets assessed the nickel briquette premium, delivered Midwest US, at 80-125 cents per lb on Tuesday, unchanged over the previous week.

Two separate 20-tonne sales were confirmed at 100 cents per lb each this week.

No other deals, bids, or offers were reported this week, with overall volumes remaining muted.

“There’s just nothing going on out there this week,” one trader source said. “All eyes are on the developing banking crisis and Russian sanctions, so everyone is afraid to take any big risks,” they concluded.

Others echoed this sentiment. Aside from the sparse briquette activity, cathode sales remained dormant.

Fastmarkets assessed the nickel 4×4 cathode premium, delivered Midwest US, at 80-120 cents per lb on Tuesday, unchanged over the previous week.

No cathode deals, bids, or offers were reported and price opinions were flat across the board this week.

Fastmarkets sources continue to report that interest in cathodes is relatively low as compared to briquettes.

Nickel premiums in China remain flat

Premiums of nickel full plate imported into China remained flat over the pricing week to Tuesday as import losses lingered, sources said.

All price assessments were within prevailing ranges, suggesting a steady import market with no liquidity.

Fastmarkets’ weekly assessment for the nickel min 99.8% full plate premium, in-whs Shanghai stood at $280-400 per tonne on Tuesday, while Fastmarkets’ assessment for nickel min 99.8% full plate premium, cif Shanghai was at $250-350 per tonne. Both premiums have been unchanged since February 14 and January 10, respectively.

Arbitrage remained unprofitable, though nickel prices on both the London Metal Exchange and the Shanghai Future Exchange saw a big drop over the week, market participants said.

“We watched the arbitrage closely every day and saw no import opportunities for now, though nickel prices on both the LME and SHFE are changing rapidly,” a nickel trader source based in northern China said.

LME’s three-month nickel futures closed at $23,040/t on Tuesday, and the price touched $22,684/t on the Friday March 10 close, well below the $23,000/t level. In comparison, the three-month nickel futures closed at $24,890/t on Wednesday March 1.

The most-traded nickel futures on SHFE closed at 177,570 yuan/t, compared with 195,620 yuan/t on March 1.

The sharp drop was an alarm bell for some market participants; it underlined the risk of nickel trade. This has been a factor as to why market activities have remained sluggish, sources said.

“The prices dropped way faster than we expected, and we think it’s not normal,” a nickel trader source based in eastern China said.

Meanwhile, some market participants were still focused on nailing down long-term contracts with Russia producer Norlisk, but progress has varied, sources said.

“Some participants have come very close to clinching a long-term contract with small volumes priced with a mix of SHFE and LME nickel prices, but big players, especially stainless steel mills, made little progress, because they want big-volume contracts, fully priced with SHFE nickel price,” a nickel trader source told Fastmarkets.

Get more in-depth nickel insights

To get more of the latest market intelligence and insights on the nickel market, visit our dedicated nickel market page here.

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Magnesium 99.9% min, ex-warehouse US, cents per lb
Quality: Ingots and sticks. Mg 99.9% min, Fe 0.04% max, Si 0.02% max, Ni 0.002% max, Cu 0.01% max, Al 0.02% max, Mo 0.03% max, Cl 0.05% max, others 0.1% max, conforming to ASTM specifications B92/92M-11 and 9990A
Quantity: 20 tonnes
Location: Ex-warehouse, US
Timing: Within 30 days
Unit: US cents per lb
Publication: Bi-weekly, Thursdays

The consultation period for this proposed price will end 30 days from the date of this pricing notice, on March 13, with an update to this proposal published on that day. Subject to market feedback, the proposed changes would take place beginning with the bi-weekly assessment on March 16.

To provide feedback on this proposal, or if you would like to provide price information by becoming a data submitter to this assessment, please contact Ian Templeton by email at: pricing@fastmarkets.com. Please add the subject heading: “FAO: Ian Templeton re: US Magnesium price assessment.”

To see all Fastmarkets’ pricing methodology and specification documents go to https://www.fastmarkets.com/about-us/methodology.

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United States

US refined nickel premiums continued their decline into the beginning of February.

Fastmarkets assessed the nickel briquette premium, delivered Midwest US at 80-125 cents per lb on Tuesday January 31, a significant decline over the previous week’s 90-150 cent per lb assessment.

While briquette inquiries continued to stack up, trading volumes cooled. No deals were reported this past week.

Price opinions steadily decreased, with traders, producers and consumers providing lower quotes.

While forward-looking demand seems to be picking up a bit, US steel producers are well-supplied for the first quarter. The near-term demand outlook is hazy at present, with sources providing mixed opinions.

One trader commented on this week’s movement, saying, “we are seeing max call-offs from our min/max briquette contracts and some decent spot demand too.”

Others were less bullish, with another trader commenting, “we have not had any spot business and it is really quiet out there, so it is hard to say where things are right now.”

Notably, sources continued to disagree somewhat as to whether the briquette and 4×4 markets were still in parity or not.

Sale data from the previous week made it clear that cathodes were once again trading at a premium to briquettes, which is historically typical, but this week quotations seemed to fall back into parity.

Fastmarkets assessed the nickel 4×4 cathode premium, delivered Midwest US at 80-120 cents per lb on Tuesday, a significant decline from the previous week’s 110-150 cent per lb assessment.

As with briquettes, Fastmarkets sources agreed that premiums have come off from previous levels. However, cathodes continue to have tighter supply and comparatively weaker demand than briquettes.

Europe

Spot premiums in Europe for refined nickel products were steady in the week to January 31, with spot market activity limited in the region.

Premium ranges for material remained persistently wide while participants continued to note differences in valuations for certain brands of material, with European-produced material for products such as cathode still able to achieve higher premiums.

Following the previous week’s decline, briquette premiums stabilized with participants estimating the current levels as reflective of the market.

Fastmarkets assessed the nickel briquette premium, in-whs Rotterdam at $450-750 per tonne on January 31, unchanged from the previous week.

Offers and liquidity were reported to Fastmarkets just above the current range but fell outside of our methodology and were therefore not reflected within the assessment.

Participants noted that demand for nickel briquettes was weak within the region, with consumers reportedly well covered for material.

Uncut cathode premiums were also flat on Tuesday, with participants noting that current market fundamentals remain unchanged, with supply for premium brands of material remaining tight.

Fastmarkets assessed the nickel uncut cathode premium, in-whs Rotterdam at $400-850 per tonne on January 31, unchanged from the previous week.

Rounding out the premiums, 4×4 cathodes were also unchanged in Europe.

Thin availability of cathodes in the region, plus constrained cutting capacity, continues to underpin historically high premiums.

Fastmarkets assessed the nickel 4×4 cathode premium, in-whs Rotterdam at $800 – $1,300 per tonne on Tuesday, unchanged from a week prior.

Total stocks for nickel remain tight in London Metal Exchange warehouses, with just 42,774 tonnes available on warrant. However, these warrants are also tightly held, increasing the sense of tightness within the market.

LME data shows that two parties have large warrant holding positions, one at 30-39% and a second at 40-49%.

China

Premiums of nickel full plate imported into China were unchanged amid quiet post-holiday market conditions in the week to Tuesday.

Most price indications remained in the same range, with an offer for Russian materials quoted at $250-300 per tonne, but no subsequent deal was heard.

Fastmarkets assessed the nickel min 99.8% full plate premium, cif Shanghai at $250-350 per tonne on Tuesday, and the corresponding assessment for nickel min 99.8% full pate premium in-whs Shanghai was also $250-350 per tonne. Both premiums were unchanged since January 10.

The return of market participants from the Lunar New Year holiday has not revived the market, with nickel prices on the LME above $29,000 per tonne, leaving spot trades on the sidelines.

“We are still reacting to the Tsingshan news on the potential supply, plus the unprofitable import terms, so we won’t bother to do any trades,” a trader source said.

Nickel briquette premiums were also unchanged over the pricing month in an “even quieter” market, sources said.

Fastmarkets assessed the nickel min 99.8% briquette premium, cif Shanghai at $0-130 per tonne, unchanged on a monthly basis.

Briquettes are facing challenges from both lingering import loss and alternatives, making them less desirable, market participants said.

“With cheaper alternatives such as MHP, people don’t need briquettes to make batteries now,” a trader source said, adding that no one would buy briquettes except for delivery purposes.

To get more of the latest market intelligence and insights on the nickel market, visit our dedicated nickel market page here.

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