At the time of this writing things have slowed for West Coast producers seemingly across the board. Pricing volatility, which is exacerbating hand to mouth orders, is being driven by a number of factors including the price of oil and gas, the recent BC stumpage increase, and the soon to be duty reduction for most BC suppliers. As we head into the fall this is what a few West Coast producers are seeing:
Dean Garofano of Delta Cedar Specialties, Delta, BC said, “The Cedar market trend continues to show very little life, with distributors mainly purchasing only what they need to fill holes. Prices have subsequently come down on many Cedar lumber products and prices can vary greatly from one supplier to another. The 5/4 x 6 decking has seen the steepest decline as the August 2022 print price is now lower than before the pandemic and less than a third of its peak price. The lack of demand and lower lumber prices have led to manufacturers pushing back on Cedar log prices. Smaller log prices that produce mainly tight knot material came down in July, but the larger sawlogs have remained stubbornly high with only very modest declines.”
Garofano continued, “Loggers find themselves in a difficult position currently, having just received a large stumpage increase on July 1st. In addition to this increase, the labor and fuel costs have skyrocketed, while at the same time the log values in all species are decreasing. The overall Q2 log harvest on the Coast was down about 8 percent from the same period of last year and looking ahead with the 2-year-old growth deferral underway, many cutting permits will continue to be elusive. Some loggers, sensing that future supply may be low, are choosing to hold onto the few logs they do have and waiting for the market to firm or stumpage fees to decrease rather than selling at the lower levels.
“Sawmills currently are more reluctant to purchase Cedar logs until they see where the lumber market settles. Often a purchased boom of logs is not cut for 60 to 90 days after securing pricing; therefore, in a declining lumber market it is a long game of catch up before the economics make sense again.” Garofano finished by saying, “The recent reduction for the all-in duty rate from 17.91 percent to 8.59 percent should be some refreshingly good news for Cedar which has lost market share, as well as priced out many consumers. However, there are many more factors at play that may stand in the way of things turning brighter. The next several months will be challenging for all as the market works its way toward a new normal.”
Leslie Southwick of C&D Lumber, Riddle, OR said, “Supply has seemed to outpace demand in a majority of products and especially Cedar products. While Cedar timber orders remain strong, we have ample supply of decking products this season. It has been very difficult to find a trading level that buyers will even entertain buying at. Pricing continues to be volatile in this market. From week to week you are never sure what pricing is going to do. The market is soft currently as we head into September and could continue to be that way into late fall if we don’t see some economic indicators stabilize soon.” Southwick continued, “Customers seem to be less than enthusiastic about the current market. It is challenging when pricing seems to constantly be moving. I think buyers continue to remain cautious and are not sticking their necks out too far with having large amounts of inventory on hand.”
In-regard-to challenges C&D Lumber continues to face, Southwick said, “Labor continues to be a challenge. We constantly seem to be hiring at least a few people. It is fire season now and Oregon/Northern California have already been experiencing multiple fires, which can lead to restrictions in the woods and log supply issues. Fortunately, we are not experiencing a log supply issue at C&D, but we are always monitoring what is happening in the woods so we can react if necessary.”
Aiden Coyles of Gilbert Smith Forest Products, Barriere, BC said, “We currently have a healthy inventory but are building across all dimensions due to decreased customer interest. 2×6 continues to be the problem with large amounts of low-price knotty Cedar readily available on the market. Every customer is maxed on their inventory and needs to see some movement before they can commit to new business. We are seeing little to no pull through right now across almost all product lines.”
Coyles continued, “High log cost persists, we are actively trying to average our inventory down with lower cost fiber. Transport actually seems to have regulated although prices still remain high. We’ve had some small fires in our area but nothing of note and the cooler weather is helping out.”
