By Zach Miller
At the time of this writing lumber prices were hitting record levels while simultaneously western production has slipped compared to the first half of 2019, leaving a hole for importers to fill. Meanwhile, sighting price surges and scarce fiber supply, dealers are running with truncated inventories. The following is a snapshot of what western producers are seeing:
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “Any trepidation from Cedar producers about a negative COVID-19 impact has been short lived as Cedar sales appear to be immune to the virus. Demand continues to be strong and prices continue to climb through the summer months. Decking has been a particular bright spot when compared to years past with most producers struggling to fill all the orders. With British Columbia’s proactive strategy for taking on the virus, infections have stayed low allowing most sawmills to run steady, helping to keep up with some of the demand. Cedar log supply is tight with some mills running hand to mouth on logs having to shut down a few days at a time due to no logs.” Garofano continued, “Some logging has stopped with fire season arriving to temporarily make supply concerns worse, but it is not expected to have as large of an impact this year with the wet June/July we had on the Coast. Here at Delta Cedar Specialties our log supply is currently in great shape and our log supply forecast looks very promising for supporting our customers’ needs. Nobody seems to have a good handle on how long this strong market will last but in the meantime we all feel fortunate to be able to keep going and earning a paycheck during this pandemic.”
Phil Schumock of Stella Jones Corp., Tacoma, WA said, “It goes without saying right now in early August mill supply into the treating plants is a huge challenge. But, that said, treating capacity is just as important, as the pandemic surge wiped out the safety stocks usually carried by western treaters. Demand from retail is unabated and the pipeline is so low it could be some time until normal retail stock levels are achieved. It’s the old adage when the prices are highest there’s nothing to sell. Retailers are frustrated with out of stocks, across the supply chain.” Schumock continued, “Labor at the plant level is very difficult. In our area, hiring is a major challenge that is affecting output. Transportation has not been the bottleneck but if the supply chain had more inventory it would become the bottleneck very quickly. Our company has stringent and so far effective policies on safe operations in our plant and offices with respect to masks etc. Most of our office employees are staying home indefinitely. In our plant the real effect has been overwhelming volume and difficult hiring.”
Brian Wells of Rosboro, Springfield, OR commented, “Demand for framing lumber has heavily outpaced supply capacity and that trend continues. Pricing has been consistently upward, often providing mid-week jumps of $20/mbf or more as buyers scramble to cover orders. Heavy demand on home center lumber driven by increased DIY remodel work is putting serious strain on the professional supply channel. Record pricing all around. We’ve seen no indication of any significant slowdown during Q3. Order files for Douglas Fir studs, both green and dry, have pushed out six weeks or more. There was very little inventory built up in the channel at the end of Q1 when the COVID lockdowns hit, primarily due to the hot market in Q1. This has left buyers stressed and scrambling for wood. We get daily comments of ‘I’m a buyer today, and price is no object. Can you sell me anything at all?’.” Wells, continued, “Log supply is extremely tight in the Willamette Valley, with log prices spiking on the heels of the spike in lumber prices. Logging operations shut down almost entirely at the onset of the COVID lockdowns, as prices made it unfeasible to harvest. The whiplash effect of every sawmill going from taking downtime to ramping up multiple shifts essentially overnight caused immediate log shortages and a steep ramp up of prices. We are just now (in August) seeing supply start to catch up with need, but no mill in the area has been able to build up any significant log inventory. It’s very hand to mouth.
“The market for sawmill byproducts (primarily chips) is working in the exact opposite direction. There are a very limited number of Softwood chip consumers in the area, with the only other outlet being export. Chip exports have been essentially zero for a number of months, which causes an oversupply situation locally. At the same time, chip consumers (primarily pulp mills) are experiencing reduced demand and have been taking mill downtime. This is putting extreme pressure on mills to find buyers or alternate disposal options for this material. I’ve seen the situation described as a train wreck, and that’s a fair assessment. We’ve had a very dry spring, which is now making everyone pretty nervous about fire season (in August). If we experience any closure of logging operations due to fire danger, mills will quickly run out of logs.” Finally, on COVID-19 Wells allowed, “At the onset of the COVID outbreak, we implemented immediate changes to work procedures in our mills and office environments. We have luckily been able to avoid any outbreaks amongst our employees. However, the lockdowns have put extreme pressure on childcare for our employees and we are experiencing a very high number of sick call outs as people try to balance home and work life demands. The ‘bonus’ unemployment benefit of $600/week has made the labor market very difficult to access, even with high unemployment numbers. It has been very difficult to staff the additional shifts as we’ve ramped up production. It seems that people would rather stay home and draw unemployment benefits, as they are in many cases making more from benefits than they would with full time employment. Applications are very sparse for numerous open positions.”
Leslie Southwick of C&D Lumber, Riddle, OR said, “Demand has heavily outpaced supply over the summer months. As soon as inventory hits our processed yard, it is sold and shipped out. We are seeing this especially in Doug Fir, but also in our Incense Cedar and Port Orford Cedar. Prices continue to trend upwards at a rapid pace with demand greatly outweighing supply. These historical high prices may hang around into late September. Our customers are extremely busy and are having difficulty getting enough supply to cover orders. They are being flexible on tallies, partial truck loads and timeframes to receive orders. I think everyone was taken aback on how quickly the market rebounded after the initial shut-downs and stay-at-homer orders were lifted in many states on the West Coast.” Southwick continued, “With a very mild fire season so far, logging has seemed to be moving forward as planned for many areas in Oregon. Currently, COVID-19 has not affected our operation. We continue to operate as we typically would this time of the season.”
