U.S.: Numerous factors come together to contribute to surge in log prices

According to various timber experts, in the United States (U.S.), a number of factors have come together to push log prices in the Northwest up in a time when demand for lumber in the nation is expected to grow.

These factors, ranging from wildfires raging in the West to the South which was hit by hurricanes, have negatively affected the log supply from forests. But at the same time, housing construction and home remodelling have driven up domestic lumber consumption as buyers from Asia continue to compete with sawmills for U.S. logs, pushing prices up higher.

Moreover, environmental laws are restricting logging on federal lands even as finding an adequate number of workers to harvest and process timber gets progressively harder.

Although Canada’s sprawling timber industry has traditionally been a major supplier of logs to the U.S., they would not be playing a major role this year, affected by the trade dispute and lumber duties standing at more than 20 per cent even as mountain pine beetles continue to damage timber in British Columbia (B.C.), Canada.

“The big question for 2018 is if harvest levels should be accelerated, and if so, by how much?” Mike Mackelwich, vice president of timberland operations, Pope Resources, said to the Coast River Business Journal.

And while high prices would point to the prime time to harvest, timber in the Northwest is finite, with the harvest level soon to hit the sustainable yield and perhaps even surging past timber growth by 2020, a relatively fast time, according to vice president of North American timber service at the Forest Economic Advisors, Rocky Goodnow, stated.

In 2017, prices for Douglas fir logs jumped 23 per cent, while hemlock saw its prices rise 20 per cent.

“It’s pointing to the tight supply conditions in the West,” Goodnow pointed out.

And as sawmills continue watching profit margins downsize, they may just stop buying, Tim Atkinson. Vice president of sales for the Stimson Lumber Company said.

But even as demand for lumber in North America is forecasted to rise by an estimated two billion board feet per year and hitting almost 70 billion board feet in 2022, any attempt to increase logging on public land would be derailed by lawsuits, Goodnow added.

And with increasingly scarce supplies, the Southern states would also be affected, as they tend to export more to the markets in Asia, such as China.

Moreover, according to the Coast River Business Journal, on top of the issue of timber supply, the U.S. timber industry is also grappling with the shortage of labour, where the opioid abuse epidemic is rife in the rural areas. And it is in those areas, according to Goodnow, where the industry is located.


Source: Coast River Business Journal