The Softwood Forest Products Buyer - March/April 2022

WEST COAST TRENDS—
Continued from page 18
seems to continue to be strong as we begin the spring
season. Customers seem to be a bit cautious when
they are making purchases, many customers tell us
that they are not making a buy until they have a PO
in hand from their customer. Our customers seem to
think that the current loll in the market will be short
lived as builders start to ramp up more for Spring,
but many underlying conditions continue to hamper
contractors and builders such as lack of labor and
supply shortages of all types of building materials.”
Southwick continued, "Demand for logs skyrocketed
towards the end of January, which pushed pricing up
for logs very quickly. We have had to be flexible and
adjust our operating plans based on availability. We
are fortunate that we have the ability to run three different
species, which allows us to continue to operate
efficiently. We have also learned to be very flexible in
how we operate our manufacturing facilities based on
current manpower. We have days that all of our team
members are at work and days when multiple people
are out for various reasons. Transportation continues
to be frustrating for all parties. Some loads will sit at
the mill for upwards of a month or two. Truck rates
continue to rise as the cost of fuel increases coupled
with the lack of drivers makes finding an available
truck very difficult. Rail transportation has been more
reliable over the last month, but not everyone can or
wants to purchase a full rail car of material leaving
them with truck transportation as the only option.”
Southwick finished by saying, "I would rate our business
as an 8; we had strong shipments the first half of
the quarter and anticipate steady business as we head
into the second quarter. Pricing is always a wild card,
but demand for housing and commercial building is
still forecasted to be strong, so hopefully this will
continue to keep pricing at a stable level especially
since log prices have been much higher than last
year.”
Chelsea Brown of Patrick Lumber, Portland,
OR, had this to say about supply and demand for
their products, "For all items prices remain strong,
supply remains challenging, so long as the demand
is there. We love to promote alternative products that
we have in abundance, such as our beautiful Doug
Fir, when other Softwood prices scare buyers. Our
customers remain optimistic about business and the
strong market we are in. Everyone has their eyes on
interest rates to see what will really happen to supply
and demand this year.” Brown continued, “Weather,
transportation, logging issues, labor – you could say
all impact our business. We focus on offering competitive
benefits, fair pay and opportunities, improvements
to our yard so truck drivers can have better
loading experiences. At Patrick, we can only control
the controllable, and we do our best to constantly
review and make improvements where necessary
to stay competitive in this landscape. Impact of this
tariff on our industry and relations with our partners
to the north continues to be a challenge. Many
customers read a headline about the duty rate change,
and ask if pricing will improve. The simple answer
is no. Unfortunately replacement costs for material
continues to increase due to log, labor and logistical
shortages. Managing expectations and constant communication
with our customers is important so they
can then explain to their customers why prices continue
to increase or remain at record levels.” Brown
finished by saying, "Business is good, I can’t give it a
10/10 because if we had more supply we could probably
sell more!" n
SOUTHEAST TRENDS—
Continued from page 20
of cash. Our month-over-month performance for the
past 12 months has been about the same.”
This lumberman, in his division at his company,
sells 98 percent Southern Yellow Pine. He sells a little
Doug Fir and Hem Fir.
He sells to both distribution yards and end users.
The success of his customers varies by region of the
world. “Most people say their business is doing OK,”
he noted. “No customer is struggling or going out of
business.”
In the area of transportation, domestic trucking is a
little better, he observed. “It’s OK. Exporting in containers
is a major problem. Prices have appreciated
and you’ll make a booking and it may get rolled two,
three or four times. Or you’ll have a booking and that
shipping line decides to drop that service mysteriously.
And you can’t find another shipping line with
service into whatever region of the world those goods
were supposed to ship.”
A Mississippi lumber source said his market is
good. “It’s strong,” he reported. “It continues to be
surprisingly strong. Our business has had zero letup
through the holidays, winter and COVID. Almost
every month our business is setting a new volume of
shipments record. That’s been the case for well over
a year.
“We sell primarily low-grade Pine and hardwood,”
he stated. “Pine prices have gone up dramatically
since COVID hit. We continue to be surprised that
our customers are not repelled by higher prices. There
is not enough production to meet demand.”
Not surprisingly, he rates his market as better than
it was six months earlier.
“Pine is the only Softwood we purchase on a
regular basis,” he observed. “We buy it in No. 2 and
Better and No. 2 common to MSR and No. 3 and No.
4.”
He sells to both retail and industrial users. He said
his customers are stronger than a year ago. COVID
affected manufacturing so that it was not up to 100
percent production, he said. There has not been full
production in well over a year. Supply and demand
have been so out of balance that customers are willing
to wait for product.
Unlike most companies, he said transportation was
not a problem. “We have a huge network of trucks,”
he stated. “We get freight moved pretty quickly, but it
is expensive.”
A lumber provider in Alabama said his market
is “very strong, across the board.” Even at that, he
said his market is weaker than it was a few months
ago. “We’re into multi-family housing and we take
contracts to build these apartments. We’re locked into
our price on these contracts regardless of what the
market does. Reload space being almost non-existent,
you’re just at the mercy of the market whatever it
does if you can’t secure the material and get it in a
holding facility. We need storage to buy lumber at
lower prices.”
He handles mostly No. 2, No. 2 and Better and a
little No. 3 in SPF and Southern Yellow Pine.
He sells to contract builders. “The market is extremely
busy for them,” he noted.
Two problems, he said, are transportation and storage
shortage. “The rates we have to pay for trucks
have tripled and quadrupled,” he stated. •
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QUEBEC/ONTARIO TRENDS—
Continued from page 20
I would factor in right now is that there have been
some very big logistics issues out of western Canada
since what they went through with the mudslides and
the rain. They haven’t been able to catch up to their
regular shipments. In the next months we might see
a little bit more wood out of the west, so that could
slow us down a little bit on the supply side. I am not
sure we are going to see similar pricing numbers as
last year, but we could get close."
Echoed an Ontario lumber supplier, “Last year it
got a little bit out of control. We saw some buyers not
thinking twice about buying, just purchasing whatever
they could find. I think this year the buyers are
more disciplined, but at the same time they still need
to have wood in their yards to support their customer
base. We are going to see some $1,500 Great Lakes
prices, but I don’t know if we are going to see $1,700.
But who knows? Human nature can do some funny
things in the short term, so anything is possible!"
On the Pine side, “The demand is good and the
market is pretty diversified actually; everything is
selling fairly well," noted an Ontario lumber manufacturer.
"Producers were able to get a price increase
recently. There is not much out there that is performing
poorly currently, but that could all change as the
Spruce prices change. The U.S. has decreased the
tariffs on Canadian products, which will see a little
more material going down there and that might lean
out the inventories a little bit. We are not going to see
the prices we saw on Spruce last winter, but I think
we might be two-thirds to three-quarters of the way
there, which will still be quite good for most."
“Pine logs are stable now," according to an Ontario
contact. "It was an issue last year with everything
benchmarked to the U.S. market, but that seems to
have stabilized. It has been pretty much the norm in
terms of the logging season; we are ok that way, but
the log supply is a little tighter this year than in other
years."
A Quebec lumber producer reported, “I do not see
prices falling off and I think it is going to stay pretty
good. Our Canadian market is quite small compared
to the states and it really depends what happens south
of the border. If the demand stays good down in the
U.S., then they will be less likely to move wood into
our market – that is the key. We don’t see the Americans
sending material up north, because once that
starts, it just throws a wrench into everything. So far
so good. Trucking is an issue; of course everybody is
feeling the pinch on that. There have been a few hiccups
with the freight here and there. It just seems to
be that there are not as many trucks available as there
once were."
Remarked an Ontario lumber producer, “It is about
time the sawmills finally got some value for the product.
We went 10 years after 2008 where everything
was in the tank. Some mills went under and a lot of
them just held it together and you were not able to put
any capital into your operation to replace equipment.
People were patching everything up, but eventually
things have to be replaced. You almost need five
years of this good business just to get yourself back
in line again and we certainly welcome this." •
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