West Coast Business Trends – November/December 2022

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As we head towards the close out of an up-and-down 2022 the overall feeling seems to be wait and see. West Coast manufacturers are settling into the inevitable end-of-year slow down and the hand to mouth ordering that goes along with keeping inventories low heading into the new year. The following is what a few West Coast producers had to say:

Dean Garofano of Delta Cedar Specialties, Delta, BC, said, “We have not seen much change in demand for the Cedar market in the past couple of months. There was a slight uptick in September; however, it should be expected that things will slow down again as we move closer to the winter months. The downward descent of Tight Knot Cedar seems to have subsided now, while clear lumber and timber prices have held steady for the most part. As we move into October, we are starting to see the clear prices soften, but so far there have only been small adjustments.”

Garofano continued, “On the log front, the Coastal Cedar log harvest was down 13 percent up until the end of July. Since then, hot dry drought-like conditions are impacting harvesting. High stumpage, in relation to lower log values, continues to make some previously engineered blocks uneconomical. Although, loggers are hoping for some relief in January by way of reduced stumpage. The current lack of lumber demand has made these reduced volumes inconsequential; however, once the market works through the excess lumber inventory, we may see some tightening in the log market. Until then, utility, and smaller second growth Cedar logs continue to see little demand and price pressure down, while Cedar saw logs and uppers remain stubbornly high.

“The old growth deferrals’ perceived future impact on sawlogs and uppers availability is contributing to keeping these levels high, despite the lumber value declines of commons and low grade. Now that we are starting to see some downward adjustments to clear lumber prices, these log sort values may also see some downward pressure. There is no doubt that 2022 has been challenging for Cedar producers who are now starting to plan for 2023 and eager to put this year behind them.”

Leslie Southwick of C&D Lumber, Riddle, OR, said, “Supply and demand for Douglas Fir products continues to stay pretty well balanced. As for Cedar products, supply is far exceeding demand as has been the case most of this year. The season for Cedar is over for this year and we are now focusing on securing programs for the first quarter of 2023. Douglas Fir prices have been pretty flat in September and may continue to be that way for much of the fourth quarter. Cedar prices have struggled to find a level that even pulls buyers off the sidelines for purchases. This type of market lends customers to more just in time buying. They are purchasing when they have orders in hand. I am not sure if anyone knows what we will be experiencing at the beginning of 2023, so there is a lot of speculation currently.”

Southwick continued, “The extended warm weather on the West Coast has led to extended logging activity and continues at pretty strong prices. There has been an abundant amount of Cedar logs available with the cool down in the Cedar lumber market.” When asked to rate the year, Southwick finished with, “2022 has been a seven for me. It has been a pretty straightforward year in terms of Fir markets, and Cedar markets have been lackluster.”

John McDowell of Oregon Industrial Lumber Products, Springfield, OR, said, “Currently we’re seeing some softening in Douglas Fir VG clears, maybe 5 percent or less except 2×2, 2×3, and 2×5 mixed grade that are servicing the door frame manufacturers. There doesn’t seem to be a lot of those sizes available. Yellow Cedar knotty has followed Western Red Cedar, which is to say demand is not high. Clears on the other hand are still the pot of gold at the end of the rainbow. If we had more, we could sell more. Customers are purchasing as much clears as we can offer, but decking seems to be way down. Lam stock is also way down; no one is building inventory this time of year, so they are ordering project by project. No one wants to carry inventory into the new year. We’re anticipating the inevitable winter slowdown. The question for us is are we going to see a bounce back in spring 2023.”

McDowell continued, “The most challenging factors of this year for us have been supply from the sawmills we work with, followed by continued supply chain issues for machinery parts, and labor. We’re constantly hoping things don’t break down and when they do we find ourselves pilfering old machinery for parts until we can get shipments. As far as the labor part goes, it’s always a challenge but ever more so with skilled hires right now.” When asked to rate the year McDowell said, “I would give 2022 a five out of 10. It was kind of a dud for us.”

By Miller Wood Trade Publications

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

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