West Coast Business Trends

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West Coast Business Trends 1
Zach Miller

At the time of this writing, prices remain stagnant and sales muted in most sectors heading into the summer with a few exceptions including Western Red Cedar fencing. Western producers are working with less access to fiber, predominately Canadian fiber and in so battling against incoming European export to the U.S. It’s hard to see where this market takes us with so many variables but considering the spring spike never really materialized producers may have to readjust expectations. The following is what a few West Coast producers had to say:

Leslie Southwick of C&D Lumber, Riddle, OR, said “There definitely seems to be more supply than overall demand. Some products such as wide DF 2-inch dimensional lumber have really come to a standstill in sales. Cedar products are also very slow to gain traction as we go into the summer season. We are hoping to see more demand for Cedar decking products as we mover later into the summer months. Pricing has seemed to bottom out on some Douglas-Fir products, but others are still seeing some downward pressure. I don’t think we are going to see any real robust prices this summer. I think the challenge for the mills will be to continue to move their inventories and with less demand this will keep pricing flat for the majority of the summer.” Southwick continued, “The overall mood from customers is sluggish. No one seems to have any urgency on placing orders. Customers know that the mills have available inventory, so they are able to wait until they have a secured order in hand before purchasing the needed lumber. Trucks and cars have been readily available for the first half of the year, which I think will continue for the rest of the year. With the very wet, rainy first half of the year, I am hopeful that this will keep our fire season in Oregon to a minimum.” Southwick finished by saying, “I think that by now we would have seen more activity and so as we go into the summer, I don’t see a lot of indicators that we will have a strong summer season. I think the commercial building industry may be the one industry that helped the lumber markets stay afloat this year, but the residential, remodeling and repair sector will remain pretty weak, which will keep lumber markets pretty flat.”

Aidan Coyles of Gilbert Smith Forest Products, Barriere, BC, said, “The market is still oversupplied with narrows. Abundance of supply with limited demand and prices still trending downwards on most items. Wide items are holding their ground more. Customers’ moods are subdued, with very little excitement. They have been particular about order size, timing length, etc. with low takeaway. Log supply has been okay. There seems to be potential for more logs to become available with decrease in stumpage. (BC is now on a one month stumpage adjustment instead of three months as of June).” Coyles finished with this, “The spring demand wasn’t enough to significantly reduce inventory. This has posed the question, what are mills options going into a historically lower demand portion of the annual sales cycle?”

Brent Brownmiller of the Gorman Group, West Kelowna, BC, had this to say about current market conditions, “As you know our product doesn’t fluctuate that much and conditions haven’t really changed over the last few months. Pricing is still flat for us. There isn’t any pressure up or down for any of our products. Our business continues to be steady.”

John McDowell of Oregon Industrial Lumber Products (OILP), Springfield, OR, started by saying, “Douglas Fir and Cedar Lam producers seem to be running slow. Douglas Fir appears to be in a very weird space, the allowable old growth cuts in Canada have buyers in the US panicking and so there have been shortages in material, particularly VG clears and flat grain is tight. We have also noticed that 2×2, 2×3 and 6-inch VG are all tight, with prices being up. In Yellow Cedar we’re managing our inventory well STK and appearance, while small knotty is slow and steady.

Red Cedar prices tanked a while back and Yellow Cedar tends to follow that to some degree, demand and amount available seems to be in line.” McDowell continued, “Our customers are still plenty busy but we’re starting to see some push back on pricing in both Douglas Fir and Yellow Cedar. We’re lucky to get 2-5 cuts from each individual supplier and so we have to manage that inventory to our customers, lots of demand for clears and not enough supply.” When asked about challenges they are facing at OILP McDowell said, “Our overhead has gone up 20-30 percent from last year to this year. We’ve had to raise wages to compete in this market, but we are finding help, it is out there. Parts and pieces for mill equipment and forklifts can still be challenging to get as well. I would give this year a 6 out of 10, if it stays an active year, it has potential to end well for OILP.”

By Zach Miller

Editor and fourth generation of the Miller family to work at Miller Wood Trade Publications.

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By Zach Miller

Editor and fourth generation of the Miller family to work at Miller Wood Trade Publications.

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