By Zach Miller
At the time of this writing demand for WSPF was seeing a moderate uptick compared to previous weeks with marginal price increases. Currently Cedar log prices are high, and supply is low, labor continues to be the number one issue plaguing manufacturers, and the bottleneck at ports everywhere is wreaking havoc on importers and exporters, exacerbating already diminished trucking availability. The following is what a few West Coast producers are saying.
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “Delta Cedar Specialties has successfully grown again in 2021 thanks to the hard teamwork and dedication from our nearly 300 employees. Our strong log supply channels, along with the strength of our distribution relationships have also contributed to the growth in volume and dollars, despite a difficult year for Cedar log availability and managing through the pandemic. As we approached November, the usual fall/winter slowdown had taken over from the frantic market we saw for most of 2021. Cedar timbers and T&G have seen some softening in pricing, while decking values appear to have finally found their range after many weeks of consistent market reductions. On a brighter note, shop and clear prices have increased dramatically through September and into October while most other Cedar items have held firm.” Garofano continued, “The sudden decline in consumer takeaway has led to some distributor delays in picking up orders, as they manage today’s high values and prepare to keep tighter inventory control going into the winter. On the supply side, Cedar logs are still in high demand and low supply, with pricing continuing to march upward despite the lackluster Cedar lumber market. Stumpage prices in BC took another large jump on October 1st, keeping upward pressure on log prices and pushing more logging blocks into the red. This rise in log prices has led to many loggers reducing their production forecasts for the balance of the year. Meanwhile, the BC Government will be coming out with their Forest policy changes shortly. These changes are sure to include some supply implications and create some short-term uncertainty. In addition, the CVD and AD duty rate is set to double to a combined rate of approximately 18 percent in late November. The tight supply may not have much of an impact on the lumber market this winter, but it could be a big factor in the spring when demand picks up.” Garofano finished with this, “Housing starts are forecast to be strong the next year which should translate into reasonable lumber demand. With the mounting added uncertainty around supply, along with the spring demand, it may be safe to assume that Cedar will stay strong in 2022.”
Mike Mitten of Gilbert Smith Forest Products, Barriere, BC said, “Currently for Q4 there is a good balance to demand and supply, it is what I would term a typical fall/early winter balance. 6” and 8” products are perhaps more in demand than supply allows and reflected in Q4 price. Q1 and Q2 demand will out strip supply for Cedar again, in my opinion, if there is a 10-15 percent drop in Cedar demand due to some retail and distributors reducing their skews or completely removing Cedar from their offerings, that still will not match the reduction in Cedar available in the market coming from BC. 5/4×6 and S4S decking will find a price point that will be successful for retail, distribution and producers. It is not at the highs of the first six months of 2021 nor the lows of September.
Ultimately the market determines the price, and it is up to suppliers and buyers to find the right balance.” Mitten continued, “Cedar remanufacturers and value added producers are all asking us to increase volumes to them. The majority believe the first half of the year will be very good, most, including ourselves, really do not know what the back half – Sept – Dec 2022 – will look like. Our customers want to ensure they have the supply to get to their customers for the first half of 2022.”
Brian Wells of Rosboro, Springfield, OR said, “It looks like pricing is finally stabilized and back into balance. A number of PNW mills took downtime all about the same time back in August-September, and after a week or two prices stabilized and started ticking back up. We’re seeing buyers coming in to cover their weekly needs but not looking to buy much further out. Dealers are still indicating robust demand, but the trick is really in finding ways to get all of the products necessary for a framing package together at once. Choppy.” Wells continued, “It’s all about finding labor. COVID protocols continue to depress worker availability within existing crews, and every mill in the region has double digit openings for new hires. The announced vaccine mandates has the workforce on edge now…it could be around 50 percent of the mill workforce at risk if/when those are actually implemented. It’s been challenging but manageable to this point, but could get much worse if mandates do in fact become formalized. For our lumber business, I would be just fine repeating this year over and over going forward. Despite transportation disruptions, increasing input costs, labor shortages, and volatile pricing…bottom line results are very strong this year. Call it a 10.”
Wells finished by saying, “We’re keeping our heads on a swivel and are expecting the unexpected. Demand for housing should remain strong, the fundamentals all support that. If things remain on the current course, I’m expecting demand to be perhaps slightly higher than 2021. However… incoherent governance from the current U.S. political regime and overall global destabilization keeps me on guard for the next mass panic event. The last one was good for the lumber business. The next one may work the other direction.”
Phil Schumock of Stella-Jones, Tacoma, WA said, “Supply and demand are slowly coming back in alignment. The lower retail prices have driven consumer and light contractors back to the table over the last couple of months and helped move through heavy stocks of treated in the market. Customer mood is very positive really, especially considering the extremes we have all weathered through the last couple of years. The general consensus seems to be that a drop in prices and some blood-letting was bound to happen at some point. Labor remains a problem for just about everyone in the supply chain. No real relief in sight on that front. In the end, 2021’s final analysis as a whole will be similar to other years prior to 2020, but what a way to get there. I’d give it a 6 for needless difficulty.”