West Coast Business Trends – May/June 2022

Share this...

At the time of this writing, Cedar prices remained high, and framing lumber prices were on a two-week skid, creating attractive openings for some buyers. West coast producers on both sides of the border continued to deal with a myriad of challenges including the usual suspects, labor and transportation taking center stage. The following is what a few west coast manufacturers had to say about the market and its challenges:

Dean Garofano of Delta Cedar Specialties, Delta, BC said, “What’s trending in the Cedar market in early 2022? Cedar demand has been a little lackluster in the early part of 2022. Many distributors report slower take away compared to the last couple of years for the same period. I think that it is safe to say that there are several factors that are contributing to these market trends. To start with, consumers are grappling with runaway inflation in almost every sector, along with rising interest rates and the devastating Russian invasion of Ukraine. There are still those consumers less impacted by economic factors that have more discretionary funds. However, many are choosing to book those cancelled vacation plans now that COVID-19 restrictions have been lifted. Adding to this are the historically high lumber prices, particularly with Cedar. Given all these factors compiled, it should not be overly surprising to see some slowdown in demand.” Garofano continued, “On the flip side, the log supply shortages I have been highlighting for months peaked in April, with sawmills and custom cutters running out of logs to cut. Mills were scrambling, Cedar log prices continued to escalate, and the lack of logs forced many coastal mills to take downtime. As spring approached logging was expected to pick up; however, helicopter logging and the old growth deferrals were still big question marks. The Russian sanctions stopped the flow of parts for the Kamov helicopter, and the price of fuel severely impacted the bottom line for heli projects, putting many offside financially. The old growth deferral impact has yet to be measured with the BC Government, leaving it up to First Nations to ultimately make those decisions. The Ministry of Forests (MOF) recently stated that out of the 204 First Nations that have been asked to respond to the government’s plans, 188 have responded. The MOF went on to say that 75 agreed with the deferral plan, seven voted against it and more than 60 said they would like more time to respond. In addition o the supply issues, trying to get completed orders shipped has been another major challenge for manufacturers. Rail cars and trucks have been incredibly difficult to source. Although the availability of transport has improved slightly, the continuation of rising freight costs has contributed to the upward price pressure of products.” Garofano finished by saying, “It will be interesting to see how all the ever-changing dynamics play out over the balance of the year. With any luck, the reduction in Cedar demand will be in harmony with the reduced log supply, and we can all enjoy a stable consistent Cedar market in 2022.”

Phil Schumock of Stella-Jones, Tacoma, WA said, “As we speak, the market for western species has definitely cracked but still has a long way to go to catch up with SYP. Futures are a wild ride and it’s hard to read too much into that as an indicator. We see good pull-through from our customers on pressure treated lumber as home equity and housing turnover both remain very high. Those two factors along with the weather usually drive our project-oriented product line. Our outlook is for a continuing strong year. Labor and trucking remain huge challenges as well as supply chain issues for new equipment. Inflation is something we’ve been living with in our industry for a couple of years, and its impact on our business has been muted by the strength of demand.”

John McDowell of Oregon Industrial Lumber Products, Springfield, OR said, “Cedar demand is far outpacing supply, especially in clears. On the other hand, I have found that we can still get and quote tight knot. Doug Fir clears are a bit more available. Some sizes can be difficult to find, but for most boards, supply and demand are in line. I think price trends are going to be pretty consistent; flat grain prices are exceptionally high and have basically closed the gap with VG.” McDowell continued, “Our biggest concerns right now are hiring, or lack thereof, and getting parts for machinery. Looking ahead, I think it’s safe to assume there will be a reasonable fire season, and we are preparing to see more issues downstream with anti-old-growth cutting in Canada.”

Brent Brownmiller of Gorman Brothers Lumber, Kelowna, BC said, “The balance between supply and demand is always the same. If we could produce more, we would sell more. Our customers must supplement our products with competitors to ensure they have product to sell. The pricing is flat, and we are hoping to maintain that trend for the balance of the year. The business climate is OK. It’s not at the record-setting pace of last year, but overall, most of our customers are happy with the pace and take away of our product. Logistics are a nightmare, and the fuel surcharges are 50 percent of the overall freight bills. Labor is also a challenge. Trying to hire, train and retain good quality staff is an issue all over North America. Logging issues are always the same. We are bringing fiber from further away to make the best boards, and it’s getting harder to do that.” Brownmiller ended with this: “We have been cutting alternative species to what has become a more regular mix. Our customers have become interested in pushing these more because they want to sell more product, and this is a way they can do that. They also need time to establish with their customers that it will be a regular program and not a sporadic offering.”

Share This
Related Articles
Softwood Forest Products Buyer
Miller Wood Trade Publications

Retail Review

Mead Lumber Purchases CMC And Reaves Buildings Mead Lumber Company announced on Dec. 6, 2023 the purchase of Component Manufacturing Company and Reaves Buildings of

Read More »