At the time of this writing it appears winter weather is finally starting to affect the North American Softwood market. That said, West Coast manufacturers thus far have maintained strong order files, but 2021 will not be without its challenges as finding the supply to balance out demand looks to remain difficult. The following is what a few West Coast producers had to say:
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “My comments written in the January West Coast trends column included that 2021 would be all about the lack of Cedar supply in both logs and lumber. Well, that could now be classed as an understatement as we make our way through the worst Cedar supply-demand imbalance I have witnessed in my entire career. The result has everyone scrambling hard to secure enough Cedar logs and lumber with little success at finding enough to satisfy their sales and production needs. This supply frenzy has led to prices going up on a very steep curve, reaching new record levels every month.” Garofano continued, “Despite the continued upward price escalation, buyers of logs and lumber are indicating that the desperate need to acquire fiber trumps any price that they need to pay. This desperation along with limited availability continues to breathe more oxygen into the upward trajectory within the Cedar industry. Unfortunately, these Cedar shortages and record high prices are opening more doors for competing species and composites as well as pricing many potential Cedar buyers out of the market. Once lost, market share can be extremely difficult to reclaim, something Cedar producers thinking long term should be concerned about. Despite the resulting unhealthy consequences, these market dynamics are bigger than any one company can control, and it must run its course until either supply catches up or demand subsides. Only then, will we regain some balance in the Cedar market, resulting in the cooling of prices and some price relief or a market correction.”
Garofano finished with, “In the meantime, this wild Cedar market will continue at least through this spring before we can hope to see some price stability. We all know what goes up must come down to some degree, so I believe it is more a matter of when rather than if prices will retreat. However, with the continued consistent decline in the Cedar harvest year over year (2020 Cedar harvest was down 20% from 2017) we can be hopeful that when this trend reverses, it will be more of a soft landing rather than a hard correction.”
Leslie Southwick of C&D Lumber, Riddle, OR said, “Supply and demand have been fairly balanced over the last month in Douglas Fir products. As soon as we have products ready, they seem to be readily selling and shipping. However, it is a completely different story for Cedar products. Demand is highly outpacing supply. I think this will be the case for most of the year with our Incense Cedar and Port Orford Cedar products. The historically higher prices in Doug Fir products that began their climb last summer seem to have rebounded again after a short dip in December. Cedar pricing also continue to climb since there will not be enough supply to satisfy the demand this year.” Southwick continued, “Customers seem upbeat about 2021. Most are very busy with jobs and need product fairly quickly. Many are thinking that the whole year should stay fairly active since there were times last year that jobs were put on hold due to COVID restrictions. I think customers see the biggest challenge being truck transportation. It has been very difficult at times to secure trucks especially for delivery into Southern California. Logging has slowed some recently with a few snow storms moving through Oregon. Logging continues to be in demand as mills need more logs to keep up with production. Again, I think this will be an on-going challenge through the first half of the year and could continue into the second half depending on the severity of fire season. I think the housing market and commercial construction will be the driving force in keeping the market strong. I think there is still pent-up demand in housing and that will continue through 2021, so far I would give 2021 an 8 out of 10.
Mike Mitten of Gilbert Smith Forest Products, Barriere, BC said, “Demand has outstripped Cedar supply by a wide margin for Interior producers as well as coastal producers. All customers indicated record years for 2020 and are seeking increased volumes for 2021. Mild weather until the time of this writing had reduced logging and especially hauling opportunities, sub-freezing temperatures in BC interior will allow for increased activity but finding people to work capably in a sawmill environment is a challenge.” Mitten continued, “We are seeing that the market is not only entirely driven by demand in North America but on all continents around the world. All of our customers so far see 2021 as a 10, so 10 it is. The q4 2020 reports coming out from Lowes, Home Depot and other publicly trading material and building companies have all surpassed expectations. Guidance for the remainder of the year indicates double digit growth.”
John McDowell of Oregon Industrial Lumber Products, Springfield, OR said, “Doug-Fir clear 6” is very tight which makes it feel like everything is tight, also 10”-12”, the focus is mostly on fire logs right now which means they are not cutting larger fiber. I don’t think we’ve caught up with the DIY push from last year, there is not enough finished material. Yellow Cedar continues to drive up for us because of Red Cedar scarcity, particularly tight knot. Most of our customers in distribution are very happy, especially in the Bay Area, Seattle, and East Coast. Between the fires last year and COVID I think we were shut down for about 45 days last year, that presents our biggest challenge moving forward, it’s difficult to know when to add/subtract employees.” McDowell finished by saying, “we’ve got 75-80% of where I’d like to be order file wise, 2021 should be a good year for OILP provided we can dodge any future COVID shutdowns.”
