Softwood Forest Products Buyer - January/February 2024

NORTHEAST TRENDS—

NORTHEAST TRENDS— Continued from page 42 going forward.” “During the pandemic,” he noted, “interest rates were way down. Now we are back to reality.” According to a New Hampshire lumberman, the slow market has been partially caused by hesitant first-time homebuyers that are worried about high interest rates. “If you have a lumber yard,” he said, “and a heavy amount of their business is going to builders that are building homes for first-time house buyers, they are seeing the most acute slow-down because there is an increase in mortgage rates. “They have the tightest debt-to-income ratio,” he continued. “Those are the ones that are most dramatically affected.” Low interest rates during the pandemic are still on the minds of many new house buyers who were unwilling to settle for higher rates in 2023. “I am prepared to change my opinion of the market every day,” the Massachusetts source said referring to the unpredictable nature of the building market. “For buyers and customers,” he said, “there is a lack of confidence in the economy.” Taking the entire scope of the timber industry into consideration, the New Hampshire source said that the pandemic resulted in anomalies within the business. “In our industry,” he said, “if you take the sawmill, the wholesalers, the customer and then the builder, usually someone is making money and someone is losing money. It is rare that everyone is making money. When we went through COVID, everyone was making money. I’ll even put the truckers in there. Right now, as it filters out, currently the suppliers are breaking even or not making money on some species. But the lumber yards are still making money, along with the builders.” The Massachusetts source said that his region faced some unique dilemmas in 2023. The Northeast market, which imports a large amount of high-quality Spruce, Pine and Fir from Europe, was flooded with overseas lumber. “The problem was that the Euro lumber had come in to port a year ago,” he said. “So, we were getting a lot of moldy lumber. The first stuff in was the last to go out. So, the lumber we were getting was moldy.” The source called it “one of the most significant things in the market. “It is all based on greed,” he added. “It was just too much and some of it ended up in Boston where they don’t normally keep a lot of it, and they rented a parking lot and put it there. We had some units come in and we started looking at the dates and they were a year old. “The importer says, ‘it’s tarped up,’” he added. “They blamed the forklift drivers for ripping the tarps. The mill guys would blame it on the yard guy for not rotating the stock. But nobody told them that they had ship-after-ship coming. They just kept piling up the wood.” The weathered stock was slowly sold due to “pent up demand.” In New Hampshire, a lumber distributor who works primarily with Southern Spruce, Douglas Fir, Hem Fir and Southern Yellow Pine, noted that the housing market in the southern states dictates much of the business. “New houses are still being built in the south,” he said. “But it is slower than I would have hoped for.” He added that the housing market in the Northeast region lacks new construction. “The Northeast is the oldest housing market in the country,” he said. “The houses were built in the 1700 and 1800s. There isn’t space for new housing.” He remains optimistic that the timber economy will soon improve. “Things are better than you read in the newspaper, as far as the overall economy,” he concluded. “But we’ll see what happens in the first half of 2024.” n INLAND WEST TRENDS— Continued from page 42 Softwood market was a lull in new housing construction. “Business is off because residential housing has been down,” said the Arizona source who specializes in the Douglas Firs used to frame houses. “We are still doing multifamily construction,” said the Idaho source, who also sells Douglas Firs and Hem-Firs. “But it has been light.” • Inclement Weather While it remains a cyclical problem that lumber companies annually clash with, winter weather remains a detriment to most of the inland west states. “We haven’t gotten a lot of weather yet,” said the Idaho lumberman, “But that is going to put a damper on things quite a bit. These job sites will get wet and snowy. “Like Denver, they get hammered during the winter and usually can’t start the building season until the summer months,” he continued. “It is a big issue.” Last year, lumber workers in Phoenix were sidelined because of soaring summer temperatures, according to the Arizona sources. Regarding interest rates and construction woes, the Montana lumberman said the country needs change to repair the industry. However, weather is an inevitable disruptor. n MIDWEST TRENDS— Continued from page 44 well your market is doing if you’ve got ice and snow on the ground everything will come to a halt. A lumberman from Texas said that his sales are slow, at the time of this writing. “We are back into seasonal trends, which we haven’t experienced for the past twothree years.” He went on to note that his sales are steady and comparable to what they were six months ago. His company offers Douglas Fir in grades No. 1 and Better, with green Douglas Fir making up the majority of their product offerings. They also offer a range of sizes from 4x4 to 20x20 in lengths up to 40 feet. They also offer Western Red Cedar in sizes 4x4 to 12x16 and in lengths up to 40 feet, depending on what they have in stock. “Douglas Fir is our mainstay and I would say that it is selling better than our Cedar,” he said. He also noted that the Cedar market lost a lot of market share due to COVID and the price point being driven up. His company sells to retail lumber yards with his customers saying that they are steady and seem to continue to be optimistic for the year. “We tend to have to decide whether they are truly optimistic or if they are just trying to have a positive outlook. Texas does tend to have a stronger market and usually withstands economic downturns better than the rest of the country,” he added. In Iowa, a lumber sales representative stated that his market has remained strong. “There are a combination of reasons that our market place is so strong right now, including several agricultural and residential projects,” he said, adding that his company is doing about the same as they were six months ago. His company offers Pine, Fir Larch, Spruce and Spruce-Pine-Fir in premium grades and select struct and in thicknesses of 1x and 2x. His company sells to contractors and DIYers, noting that they all seem to be busy. n WEST COAST TRENDS— Continued from page 44 Cedar clears are moving steady, STK not so much and LAM stock is pretty slow. Prices for Red Cedar clears are high so supply must be tight, Doug Fir clears are also still high, 6-inch and wider are still really tight – same with VG Hemlock. The upper end items seem to be coasting given the time of year but no one wants to hold inventory. It’s very hand to mouth purchasing. We’re pretty comfortable with our supply right now and are looking forward to a similar year as 2023." Dean Garofano of Delta Cedar Specialties, Pitt Meadows, BC, said "Well, 2023 has proven to be a difficult year for most Coastal operators here in British Columbia. Lumber markets were soft coming out of 2022 and stayed that way, leading to high lumber inventories and little appetite to purchase more logs. This, along with the continuation of the BC Government old growth deferrals and other anti-logging policies, resulted in most logging permits and cut blocks being under water economically.” Garofano continued, "If that was not enough, just as log demand picked up late spring, we went into the worst and longest fire season in many years. The result is the continued shrinking of the Coastal Forest industry, with the harvest down more than 15 percent from 2022. One would think that the lack of log availability overall would have led to higher log values; however, lumber demand is also way down. So, for most of 2023 we had very low supply along with very low demand and there is not a lot of optimism that 2024 will be much better. Here at Delta Forestry Group, our sawmills battled the log shortages all year, but our Cedar program stayed strong thanks to our long term valued partnerships on our program business. Our DC Supreme and Superior, as well as Premier timber products had steady take-away all year. For 2024 we are expanding our Hemlock program through the direction of Rick Harris. We offer a wide spectrum from low grades, dimension, and specialty timbers, right through to shop and VG clears. Although 2024 will present continued challenges, we are excited about the continued success of our Cedar programs and the expansion of our Hemlock programs.” Aidan Coyles of Gilbert Smith Forest Products, Barriere, BC, allowed the following on supply and demand: "Uneven demand between uppers STK and low grade, starting to see some increased demand across all items, price remains flat. Continued on page 72 SKANA FOREST PRODUCTS LTD. Lumber wholesalers of SPF, Douglas Fir, Pine, Plywood and Western Red Cedar Skana is both a manufacturer and distributor of quality forest products. At our remanufacturing facility in Vernon, BC, we produce a full program of high-grade specialty Western Red Cedar products while the Herbert, Saskatchewan plant’s primary focus is specialty SPF products. If we don’t manufacture what you’re looking for, our experienced Wholesale Distribution Division will help you find it. 604.273.5441 Skana.com Toll Free: 800.665.4213 Page 70 Softwood Forest Products Buyer • January/February 2024 Softwood Forest Products Buyer • January/February 2024 Page 71