Among the many recurring challenges West Coast Lumber manufacturers face, labor shortages at the mill level, trucking, etc., seem to be plaguing U.S. producers the most much like the rest of the U.S. in manufacturing, retail—really all sectors. Western Canadian producers are also facing challenges on multiple fronts including trying to get the U.S. to come to the table and adjudicate a new Softwood Lumber Agreement.
Hard to believe we’re past the mid-way point of 2021, the following is what a few west coast producers are saying about the year so far:
Terri Adair of Seneca Sawmill Company, Eugene, OR said the following about supply and demand for their products, “GDF demand is still strong and not much change in supply. GDF seemed underpriced compared to the dry market so it feels like GDF prices will hold. Dry seems to be softer with a little weather, rains in the Midwest. We are starting to see more product available in the market. Prices were so high on many things that there seems to be a lot of price resistance. I think we will see a pullback in the market and temporary price reductions. There still seems to be good future demand I believe this will just create a buying window and that prices will stabilize fairly quickly.” Adair continued, “Business still seems steady even though uneasiness about high price buying is still going on every day. Buyers are shopping hard for bargains and mills seem to be fairly aggressive to be sure and accommodate buyers. Some rains in the Midwest have allowed a slight pause on building. Truck issues continue, rates are going up weekly. It’s been a very strong 1st half, unprecedented and history making.”
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “As summer approaches we have seen SPF prices decline from the spring’s all-time highs and this in part has Cedar buyers acting a little more cautious on purchases. The demand for 5/4×6 has cooled somewhat this summer after robust demand drove prices to record levels this past spring. Some influencing factors of the cooling 5/4×6 market are the loss of retail sales due to sticker shock, as well as alternatives and substitutes picking up market share and the increased vaccination rate, allowing more freedom and some movement away from home projects.” Garofano continued, “It should not be surprising to see buyers taking a more defensive position after the unprecedented upward trajectory in pricing this past year and the fear of being caught with overvalued inventory. In fact, a partial Cedar price correction followed by some consistency may be best for Cedar in the long run. Current record lumber prices have made inventory management much more difficult for companies operating on the same credit or banking margins they had prior to this historic run. Today trying to run with your typical inventory volumes requires a much higher dollar amount, emphasizing quicker turns and reduced ability to surge during slower take-away months. These concerns may result in a more defensive approach from buyers wanting or needing to reduce their inventory this fall/winter.”
Additionally, Garofano commented, “The forecast for the overall lumber demand post pandemic is expected to be strong and healthy right through 2022 and conversely, Cedar log availability is anticipated to remain tight. Focus on old growth logging has once again attracted attention here in BC, resulting in logging deferrals of in-progress logging blocks as well as already approved cut permits, creating more volume uncertainty.” Garofano said, “These old growth deferrals will no doubt put more strain on overall Cedar supply and saw log products such as clears, shops, timbers, and rough dimension and could become another obstacle in getting some future cut permits approved. These latest developments will add to the declining overall Cedar harvest trend we have seen over the past several years and along with strong overall demand in 2022, may temper any broad price correction from getting much traction. Conditions in Spring of 2022 will likely be calmer than the frenzy of Spring 2021, but a supply/demand Cedar imbalance could be at play again. Those buyers pulling back too hard on purchases late this year, then looking to fill orders early next year for upcoming Spring, risk being on the outside looking in.”
Leslie Southwick of C&D Lumber, Riddle, OR, commented, “The demand for many of our Doug Fir products still seems to be outpacing supply but not at quite the intensity as earlier in the Spring. After the Memorial Day weekend, overall sales activity has been a little bit quieter with a feeling that prices may have topped out in the short term. This may be due in part to buyers working through the wood that they had purchased a month or two ago that they are just now taking delivery of, coupled with the futures market starting to trend down over the last few weeks. Customers start to get a little nervous about buying too much at a high price once there is a shift in the futures market. However, customers still seem to be upbeat and are still very busy. Many are busy quoting out jobs that will begin in early and late Fall.” Southwick continued, “The biggest challenge customers are still facing is the lack of transportation to haul their loads. At times, it is taking 4-5 weeks to move a load by truck at substantially higher prices. I also think customers are having to take time to explain and justify these historical high prices. There have been many articles in the media claiming that the sawmills are hoarding lumber to drive up prices and this just isn’t true. We want to supply our customers and there are multiple factors that are driving the prices up. Fire season is upon us with some fires already popping up on the West Coast. This can cripple logging very quickly. Many are still trying to salvage logs from last year’s fires in Oregon, so an early fire season could be detrimental to the log market by quickly causing a shortage of logs if they are not able to log as much due to fires.
Hiring enough labor is still a challenge and I think will continue to be a huge challenge throughout the rest of this year. We are constantly looking for additional employees to just be able to run a minimum of 40 hours a week.” Finally, Southwick said, “The first half of the year has flown by and for the most part it has been a very positive year. Yes, there are always going to be challenges whether the market is hot or not, but overall to see the industry be busy and to see infrastructure continue to be built on the commercial and residential side has been very exciting.”