West Coast Business Trends

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At the time of this writing, single family construction had decelerated giving way to softer lumber demand with some mills deciding to curtail production at some of their facilities. The new year is certain to bring new challenges. The following is what a few West Coast producers had to say.

Brent Brownmiller of The Gorman Group, West Kelowna, BC said, “Pricing has been flat for the last six months in North America. We have a buildup of 6’ product available since the Japan market has slowed during 2022. Our turnover of Elite boards is balanced based on the inbound fiber, but long length clears in all widths are under increased pressure.”

Brownmiller continued, “Business climate overall is positive. Nobody is expecting the same demand as 2020 and 2021, but the takeaway seems more normal. Challenges mainly are still labor shortages. Weather has been okay in our region so far this year. We have seen less of an impact than most years and we have not experienced any major transportation issues this year. I am expecting a flat market for 2023 with less volatility in demand. Our customers have given us a pretty good indication of their needs for the year. We will always see a strong demand for 1×6 pattern stock, but we have noticed a positive trend in the use of more 1×8 product. It is a very good item that installs faster and has a great look for those rooms or walls that are a bit larger.”

Phil Schumock of Stella-Jones, Tacoma, WA said, “As is usual, supply of our preferred Western species in the late-fall/early winter is fairly ample. Pricing is seasonally fairly normal and predicting less volatility in early 2023 than the previous two years. Considering the more macro economic headwinds, the mood is very positive for our customers. While housing turnover is going to be greatly reduced, the expectations are still positive for a healthy level of activity at the mid-size builder down to the consumer side. As our main line of business is ultimately products used outside the home, weather is annoyingly a huge factor. Labor challenges continue while transportation has improved somewhat.”

Aidan Coyles of Gilbert Smith Forest Products, Barriere, BC said, “We are still in an inventory build mode on narrow products; demand has seen an uptick with customers looking towards Q1 business. Still, there is nothing substantial, and we will have a surplus of inventory for a while. Prices appear to have stabilized for now, with some products already at pre-COVID levels. Customers are quietly optimistic.”

Coyles continued, “General consensus is that the next six months will be more of the same, then we might start to see some market bounce back for Q3-Q4 2023. Logs right now for us are in abundance – still too expensive but slowly being corrected. Snow continues to be an issue on the Coquilhalla – we have had little downtime due to the cold and so far fingers are crossed. Looking forward into the new year, there is very little interior logging activity as compared to previous years. This may result in a log shortage again when things get back to normality. I share in my customers’ sentiments, more of the same with 2×4 and 2×6 continuing to be a challenge until we can get out from underneath current inventory levels. I hope for a better latter half of 2023.”

Chad Findlay of The West Bay Group, Langley, BC said, “We have a decent order file. Though it’s a fluctuating market, some items are holding strong while some are in over supply. Overall there seems to be even balance between supply and demand. Customers are posturing for future buying decisions. They’re asking lots of questions, trying to figure out when to make their first quarter purchases.”

Findlay continued, “It hasn’t been as active as it will be, as customers are feeling out the market while trying to manage inventories as we near the end of the year. We anticipate a normal-level uptick in the new year, stabilizing to about 2019 levels.”

Dean Garofano of Delta Cedar Specialties, Delta, BC, said, “At this time of uncertainty, the Cedar market has continued to show sluggish demand and with winter now here, it will likely remain that way until spring. There continues to be a surplus of Cedar lumber available overall and with very little demand for narrows, there has been more price softening in 1×4 and 1×6 boards. Most other Cedar items do seem to have found their price level after a year of adjustments. The decline in decking values has subsided and lately there has been a little interest shown for 5/4×6, giving some hope that we may see some life in the decking market resurface this spring. Timber prices have held steady in 2022; however, late in the year the offshore clear demand has dried up which has led us to a softening of clear prices.

A snowy November contributed to reduced logging of late, as well as costs (stumpage) being out of sync with market log values. Logs of all species have declined considerably the past few months, making many current cut permits uneconomical to harvest. There should be a modest stumpage reduction this January; having said that, it may take until the April adjustment before we see it come down enough to put costs in line again. Despite reduced logging on the Coast, there are still plenty of second growth Cedar logs available for purchase. Old growth sawlogs on the other hand, remain harder to come by and may be even more elusive in the future. According to a recent report from the BC Government, old growth logging has declined by more than 40 percent from 2015 through 2021. It should be noted that this decline started prior to any implications from the recent old growth deferral announcement in British Columbia. Cedar gang and chip-n -saw logs have seen a rapid decline in values this year following the Cedar lumber market prices, while old growth sawlogs and uppers have held prices for the most part. Some loggers are trying to hold onto their small log inventory expecting supply to tighten this spring in anticipation of higher log values. Although, with all the economic headwinds facing consumers these days and housing starts on a downward trend that viewpoint may be overly optimistic. Nonetheless, with all the instability in the market over the past months, we will continue to watch the market closely and tackle the obstacles as we slowly navigate our way out of this downturn.”

By Miller Wood Trade Publications

The premier online information source for the forest products industry since 1927.

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