As we head into the new year, lumber prices continue their upward trend, not quite at the record prices from earlier this year but not that far off. A number of factors are contributing to these price trends, one thing is for sure, between weather, new duties, BC logging deferrals, labor, and transportation issue, West Coast buyers and manufacturers have their hands full. The following is what a few of them had to say about current conditions:
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “After 2020, the year of the pandemic, it would have been a safe bet to assume that 2021 would be a much less eventful and more manageable time for Coastal operators and manufacturers. Surprisingly, 2021 has turned out to be another challenging year here in Coastal British Columbia. The pandemic operating issues are less of a concern here today, but Mother Nature has recently taken center stage on impacting supply. Solid demand and take-away led to lower log inventories for most manufacturers this past spring, as orders were shipping as fast as they could be produced. A hot dry summer, that included a heat dome, pushed temperatures to record levels. This, consequently, turned into an extended fire season that curtailed logging over the summer months and further reduced log inventories.” Garofano continued, “Once logging started to get some traction again, Coastal BC saw record amounts of rain that eventually led to a catastrophic flood. The devastation to communities and forest licensees in the valley is still currently being assessed. Many logging areas are still shut down while dealing with clean up and waiting for Geotech reports on the roads damaged from all the mud slides as well as bridge and culvert wash outs.
When logging in these impacted areas finally gets back into production, the additional uncertainty created from the recent BC Government announcement to defer 2.6 million hectares of old growth forest in BC will be a new hurdle to climb. Licensees are currently scrambling to identify which areas are affected within their license. As we all try to quantify the impact these old growth deferrals will have, the one sure bet is they will most certainly result in less supply. The upcoming months will require careful navigation and hard work to face the challenges of this new unchartered territory.”
Leslie Southwick of C&D Lumber, Riddle, OR had this to say about supply and demand for their products: “Currently, demand is outpacing supply in most Doug Fir products. Overnight, the tone of the market is reminiscent of the run up in the early Spring with prices jumping very quickly just in a couple of weeks. Again, reminiscent of last Spring, pricing is quickly rising as customers scramble to find supply with pricing secondary on their mind. Order files are stretching out to mid-January. The Cedar market also seems to be heating back up with increased demand and lots of conversations about availability and supply for first and second quarter.”
Southwick continued, “Most customers seem to be very busy, but nervous about finding enough supply. The biggest challenge continues to be transportation. Truck availability is very scarce and trucking companies are raising their prices very quickly. Labor continues to be a challenge in all areas of the lumber industry from logging to shipping. We have received emails that a truck can’t make it in and railcars can’t be delivered because of staffing shortages. I think the updated duties will keep upward pressure on the demand for our Cedar products, I think that it could be a very busy first quarter.”
Brett Slaughter of Elk Creek Forest Products, McMinnville, OR on supply and demand: “We have so many products, they don’t all fit in the same category. However, the supply is trending in the short position. There is more need of goods and services than what is available. Price trends will continue up and challenges all through the distribution cycle will materialize. I suspect it will take 2-3 times as long for end users to procure products in 2022.” When asked about what challenges ECFP is facing, Slaughter said, “Labor, Labor, Labor – all consistent messages of LACK, a large part of the supply challenge lies in the fact that no one is fully staffed. Mood is great when it comes to available work (sales) out there in the next 2 Qs. Recent Canadian flooding is impacting our region and beyond.” Slaughter finished with this on the affect the newly implemented tariffs would have on business: “Tariffs come and go and in general don’t tip the scales (by themselves) but as a combination of current factors, this will create added push on prices.”
Chelsea Brown of Patrick Lumber, Portland, OR said: “Doug Fir supply should be good in the first quarter. Oregon and Washington producers are cutting a lot, that said, anything out of Canada is iffy with the new tariffs. I think there is enough supply in the market right now to keep prices somewhat stable. The second quarter will paint a better picture for the year.” Brown continued, “Our customers are optimistic about Q1; folks are tired of talking about supply issues. The question now is ‘do you have it?’ Shipping continues to be a major issue for us, no containers and when you can’t turn your inventory it creates problems to say the least. Used to be scheduling a truck was a 1-2 day deal – closer to two weeks or longer now.” Brown finished with, “ I’m confident it will be a strong year for us; there are alway problems and when one goes away, another rises to take its place.”
