VERTICALFOCUS
CHECK THE OIL Oil demand and prices are a particular concern in the transportation sector. With a weakened economy in China, the European energy crisis, production dierentials, and a strong U.S. dollar, demand for oil will weaken in 2023— from 2.1 million barrels per day (mb/d) in 2022 to 1.6 million barrels per day, predicts The International Energy Agency. In the near term, Q4 2022 is expected to show a decrease in oil production by 240,000 barrels per day (kb/d). Although world oil supply rose by 410 kb/d in October 2022 to 101.7 mb/d, forecasts call for drops up to 1 mb/d for the remainder of 2022, prompted by OPEC+ cuts and bans on Russian crude. This situation could impact an already delicate diesel market. In October 2022, diesel prices and cracks (dierential to crude oil price) rose 70% and 425% higher, respectively, year-over-year— representing record levels. Compounding the problem, distillate inventories are the lowest they’ve been in decades. And worker strikes in Europe, combined with impending embargoes, drove prices past $80/bbl above North Sea dated crude oil price assessments, a benchmark to measure the price of North Sea crude against other grades of crude around the world. Prices also rose in the United States ahead of the winter heating season. Price increases fuel inflation and raise pressure on world oil demand. Despite the projected downturn in production, there could be growth in jet fuel and LPG/ethane for petrochemicals markets. This could drive even higher prices. “Competition for non-Russian diesel barrels will be fierce, with EU countries having to bid cargoes from the United States, Middle East, and India away from their traditional buyers,” notes the report. “Increased refinery capacity will eventually help ease diesel tensions. However, until then, if prices go too high, further demand destruction may be inevitable for the market imbalances to clear.”
OUT OF THE WOODS Despite well-publicized shortages during the pandemic, the North American wood products marketplace, including softwood lumber and engineered wood products, will trend upward between 2022 and 2026, with a 6.75% compounded annual growth rate (CAGR), predicts a ResearchAndMarkets report. Current estimates value the wood product market at $187.8 billion in 2022 ( see chart ). At the projected CAGR, the wood product market will grow to $243.9 billion by 2026. Population growth and new residential construction are primary drivers of this growth, but price fluctuations and increased availability of wood alternatives could provide challenges, the report warns. The United States represents the fastest-growing market in North America due to consumers' fondness for home repair and remodeling, increased new residential construction, and abundant forest reserves. Wood is also perceived as an environmentally friendly material, which may also spur manufacturing increases. Additional growth drivers include consumer preferences for engineered wood and increased investment in tourism infrastructure, according to the report.
NORTH AMERICAN WOOD PRODUCTS MARKET
USD 243.9 Billion
USD 187.8 Billion
2022
2026
Source: ResearchAndMarkets
December 2022 • Inbound Logistics 13
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