In the past few months the West Coast has experienced a particularly difficult time as manufacturers have had to deal with COVID shut downs, forest fire evacuations from smoke and the fires themselves, to labor shortages, new forest product regulations for Canadian producers and no end in sight for the Softwood lumber dispute. As we head into the final months of 2020 this is what a few West Coast producers had to say:
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “As we draw close to the end of 2020 the Cedar market continues to show great resilience to COVID-19, and will in fact finish with one of its strongest years on record. Supply concerns have been at the forefront for both manufacturers and distributors with 5/4×6 decking leading the way. A poor log export market curtailed logging and two Cedar sawmills closed their doors for good this year on the Coast fueling a supply demand imbalance. In addition, a COVID home renovation surge started cleaning out box stores and creating pent up demand. With poor export log markets expected for the next couple of years and the home reno boom possibly continuing next spring, we may see much of the same for most of 2021.” Garofano continued, “Recently the new Manufactured Forest Products Regulations came in to effect October 1, 2020 in BC with any less than fully manufactured Red or Yellow Cedar products now attracting a 13 percent Fee in Lieu on top of the already punishing CVD. Any shipments of not fully manufactured products going to the U.S. will require an exemption approval before being able to ship, although the actual Fee in lieu rate will not kick in for the first month. Starting October 30, 2020 any shipments under the exemption will attract the FIL and no doubt have an impact on sales of clears, shops and other rough Cedar products. The FIL rate is tied to the CVD at .67 of the all others duty rate and thus will also change if the duty rate changes.” Garofano finished, “Anything shipping over 3,000 miles as a crow flies as well as any less than fully manufactured products used ‘as is’ such as timbers will not attract the FIL.”
John McDowell of Oregon Industrial Lumber Products, Springfield, OR said, “Doug-Fir clears are not tight except for 6-inch. It’s taken multiple weeks to find a truck load of VG clear, so with the exception of a few items the supply has been pretty steady on Doug-Fir. The demand seems to be more project-based, not as much re-model with very little pressure on 8-inch and wider. On the Yellow Cedar side, lam stock has seen an improvement but still relatively slow compared to a year ago. Supply is tight with Canadians coming off strike and lack of a tariff resolution. We have plenty of clears in stock but not seeing a lot of new shipments and tight knot is slim pickings because it’s getting substituted for hard to find WRC.” McDowell continued, “Our customers are busy and doing well but are worried about winter inventories; they think it’s going to get ugly in the next few months with all of the uncertainty so they’re trying to keep lean inventories. Our primary issues have been finding good help, always, and having to shut down the mill multiple times for COVID and fires. I’ve heard trucking has been an issue, and of course just trying to keep everyone safe. I think it’s going to be a slow and chaotic finish to the year; hopefully this disconnect between mills and distributors will balance out this winter.”
Mike Mitten of Gilbert Smith Forest Products, Barriere, BC said, “There is definitely more demand than supply. Supply constraints will be the issue for remainder of 2020 and I do not see this changing at all in 2021. Our Cedar prices have increased moderately compared to whitewood prices since the bottom of the market from September 2019 to March 2020. There is a price point that is yet to be found that will create a balanced market. All of our customers are indicating they have had a record past six months for sales. They are suggesting that 2021 expectations are for the market to be strong for 2021 and into 2022. Our customers challenges are that there is not enough supply to meet demand. This is in all products, 1-inch, 2-inch, 5/4 rough and S4S.” Mitten added, “Continued pressure from environmental and community groups to decrease harvesting and in some areas stop forest harvesting completely are forestry constraints we do not see ending soon. Issuing of cutting permits in BC are being challenged by NGO’s continuously. In regard to logging contractors, a few operators retired or sold their equipment in late 2019 due to markets that were below break-even and did not look like it was going to return to balance anytime soon. Finding road builders and logging contractors is a challenge as well now.” Finally, Mitten said, “4th quarter demand – customers are still wanting loads asap. They are all requesting volume allocations for 2021 already.”
