Crossties

NOV-DEC 2017

Crossties is published for users and producers of treated wood crossties.

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CONTACT RTA WEBSITE BECOME A MEMBER BECOME A MEMBER RTA WEBSITE CONTACT Cahaba Pressure Treated Forest Products Eagle Metal Products East Coast Railroad Gross & Janes Co. Hurdle Machine Works Koppers Inc. CROSSTIES • NOVEMBER/DECEMBER 2017 8 TRENDS ecently, a member asked an impor- tant question regarding the way RTA graphically presents long- term trends in purchases, production and inventory data. This member had noticed that RTA reported tie inventory through September had seen an 18.6 percent reduction since its peak at around 23 million in January 2017, yet the graphs RTA publishes in Crossties magazine's TieTrends' Long Term Trends section were not exhibiting that rather dra- matic trend. The answer to why the inventory line showed only a flattening of the trend is quite simple but suggested some other ques- tions for the RTA economic team. This investigation led to the development of this article. First, let's answer the question by pre- senting Figure 1, which has been aggregated in a manner that is similar to how the data appears in Long Term Trends section of TieTrends, i.e., it is presented in 12-month moving average format. In this aggregated graph, the data for production, inventory and purchases are shown for the past 10 years. RTA has been presenting this data in this manner for 20+ years because it is a consis- tent way to view longer term trends rather than only producing a graph of the monthly data points (see Figure 2). It may be pointed out that TieTrends does contain all the actual monthly data points for seven years on the previous page under the heading of Short Term Trends, as well as in the online monthly Purchases Report. As one can see from Figure 2, the reader can't really discern meaningful long-term trends by looking at monthly data graphed in raw form. Looking at the data as 12-month mov- ing averages, however, allows the longer- term trends picture to become more clearly defined. Nevertheless, without digging into the data tab of the RTA Purchases Report, certain short-term trends will take longer to visually manifest in this way of graphing the data. This is one reason it's important for analysts to consult the online RTA Purchases Report, which presents these data every month in three ways: short-term (monthly), mid-term (quarterly), and long- term (12-month average) in both the report and data tabs. NUMBERS DON'T LIE By The RTA Economic Team 500 700 900 1,100 1,300 1,500 1,700 1,900 2,100 2,300 2,500 10,000 15,000 20,000 25,000 30,000 35,000 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Production and Purchases Inventory 12-months Moving Averages of Tie Production, Purchases, and Inventory (in 000) Production Inventory Purchases R 700 1,200 1,700 2,200 2,700 3,200 10,000 15,000 20,000 25,000 30,000 35,000 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Sep-17 Production and Purchases Inventory Monthly Tie Production, Purchases, and Inventory (in 000) Production Inventory Purchases FIGURE 1 FIGURE 2 Producers and users alike should consider the potential consequences of this gap widening [purchases up vs. inventory down]in the context of other recent reports from the field, such as increased shipments of oak logs to China and other marketplace trends for low grade hardwood products.

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