“It was a runaway market again last week as prices soared thanks to persistently limited supply.” — Madison’s Lumber Reporter
Madison’s Weekly Softwood Lumber Prices
Softwood Lumber Prices Slowly Recover from Recent Lows: May 2019
Some wholesaler (net FOB sawmill) standard construction framing dimension softwood lumber prices rebounded slightly last week from recent lows, while most prices remained flat from the end of April. While reasonable amounts of wood are being traded, demand could hardly be regarded as lush. Sellers, whether producers or secondary suppliers, had plenty of lumber commodity items on hand — and access to increased supply if necessary — but customers were just not coming to the table with significant buys. As a result, sawmill order files remained at barely two weeks. This would be much less if several large manufacturers had not curtailed significant production and announced future curtailments and looming closures for this summer.
This very week, more sawmill closures were announced, this time by Tolko Industries. That company revealed Monday that it will permanently close its Quesnel, BC, sawmill and will reduce shifts at its Kelowna, BC mill. Be ahead of these data releases … Don’t delay, this week’s softwood lumber market comment was published to the website Monday morning.
Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS
These sawmill capacity reductions and removals will improve both the log supply and lumber price situation for Pacific Northwest sawmills.
For the week ending May 10, 2019, Western Spruce-Pine-Fir KD 2×4 #2&Btr (RL) FOB sawmill wholesaler prices were US$332 mfbm, unchanged from the previous week. This week’s price -$16, or -5%, less than it was one month ago. Compared to one year ago, prices are down -$286, or -46%.
Dimension Western Spruce-Pine-Fir trading proceeded at a meandering pace; plywood prices appeared to finally hit a bottom. — Madison’s Lumber Reporter
Speaking of sawmill capacity, the latest issue of Lumber Track, published monthly by the Western Wood Products Association, shows sawmill capacity utilization the US fell slightly while that in Canada tanked by a large amount compared to the same time last week. Sawmill production as percent of practical capacity in the US for February was 86%, down 1% from February 2018.
However in Canada there is a sharp drop, Canadian sawmills operated at 78% of total capacity in February 2019, down a full 9% from 87% in February last year.
Traders of kiln-dried Douglas fir lumber described selling spruce as “a crap market”, while demand for Doug fir was “good and strong” by comparison. — Madison’s Lumber Reporter
The below table is a comparison of recent highs, in June 2018, and current May 2019 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015:
Severely Bad Weather Across Continent Barely Slows Lumber Industry
Demand, especially from retailers, continued so strong this week that many North American sawmills were actually able to grow their order files.
Current Softwood Lumber Prices Compared to Historical Highs.
The below table is a comparison of June 2017 and January 2018 prices for benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05:
As Madison’s had anticipated at the end of 2017, the North American lumber market was back in high-gear this week as customers in Canada and the US kept up demand as strong as it was before the end of last year.
Significant volumes of 2×8 construction framing lumber arrived at the US eastern seaboard from various EU sawmills (generally Germany but also some Scandinavian countries), which — once it was ripped down to 2x4s — proved to not meet US building standards. This sent desperate-for-supply resellers in the locations directly affected to several ESPF producers in Canada.
Otherwise sawmills are back and running after holiday breaks, maintenance, and weather closures. Log supply remains the biggest concern in the west, as many operators are still waiting to find out how much of their respective timber access has been directly impacted by the massive wildfires last year.
Customs brokers operating the US border inform Madison’s that — in a usual but aggravating ‘err on the side of caution’ move — due to lack of clarity on specific product HS codes, US Customs and Border has decided that shakes and shingles made in Canada are for now subject to the softwood lumber duty.
The graph below illustrates 10-year price trends for WSPF, ESPF, and SYP KD 2×4 #2&Btr:
New Paper Product Category Standards
FPInnovations, in collaboration with The American Forest and Paper Association (AF&PA) and the Forest Products Association of Canada (FPAC), announced Thursday it has developed a Product Category Rules (PCR) for North American market pulp, paper and paperboard products, tissue, and containerboard manufacturers.
This PCR allows North American pulp, paper, tissue, and containerboard manufacturers to communicate the environmental footprints of their products in compliance with international standards.
Standardizing Paper Product Categories
FPInnovations announced Thursday it has developed a Product Category Rules (PCR) for North American market pulp, paper and paperboard products, tissue, and containerboard manufacturers.
In order to ensure the transparency of the PCR development process, FPInnovations chose an independent organization, Sustainability Edge Solutions, to chair the technical committee established to develop the PCR and engaged with other program operators, namely the International EPD System based in Europe and CSA Group operating from Canada.
Full details available here: https:// fpinnovations.ca/ResearchProgram/en- vironment-sustainability/epd-program/ Documents/n-american-market-pulp-pa- per-and-paper-products-tissue-and-containerboard.pdf
Strong Softwood Lumber Prices Plus Duties for Canada : 3Q 2017
The 3Q 2017 issue of Madison’s Forest Pulse is almost ready to be sent to subscribers! Don’t miss out on this vital and timely information.
Much is being made of current high softwood lumber prices, as opinions abound about the near-future supply-demand balance. Forestry has been a seller’s market from the very beginning of this year, and all signs point to continued, ongoing strong wood demand in the US for real building projects.
This week Madison’s takes a look at the most-often used wood construction framing commodity prices compared to the all-time highs of mid-2014 to mid-2015. There are some very interesting changes to the movement of those prices against each other from that time to present.
Current Softwood Lumber Prices Compared to Historical Highs
As the table above illustrates, western and eastern spruce-pine-fir — produced largely in western Canada and Quebec respectively — prices are rising now compared to the soaring highs of 2Q 2004.
For it’s part, southern yellow pine — manufactured mostly in the US south — matched those increases of SPF until about June this year then started to lose ground.
On the graph above it is clear that, into 3Q 2017, the previously consistent rise of southern yellow pine lumber prices has retreated while western and eastern SPF continue to climb.
Current Softwood Lumber Prices Compared to Historical Highs
The latest data, meanwhile, shows steady upward trends in softwood lumber manufacturing across Canada and the US, as the upcoming issue of Madison’s Forest Pulse will show.
Even at writing, North American sawmills are reporting to Madison’s that their order files are past the beginning of December, which is quite unusual. Normally at this time of seasonal low for construction and building, sales would be slowing down and sawmills would be getting ready to empty out their log and their lumber yards for year-end.
For the very first issue of 2017, Madison’s noted quite strong demand for softwood lumber which doesn’t seem to have abated much over this year. Come the first week back to work for January 2018, it is reasonable to expect similar high demand, and therefore prices to remain on the upside.
Update on Immediate Loss to Merchantable Timber Supply due to Wildfires: British Columbia
Kamloops, British Columbia — right there in the middle of sawmill country for western North America — area directors in the Cariboo Regional District were given a briefing Monday on the estimated timber losses industry is facing in light of this summer’s devastating wildfire season.
Reasonable expectations are that the immediate loss to merchantable timber supply for other regions and operators will be similar:
“estimated that the fires impacted close to one year of the British Columbia provincial annual allowable cut (AAC) and up to 6-10 years of the AAC in Cariboo management units.”
“depending on the severity of burn, we’re anywhere from two to a maximum of four years before the trees won’t be viable to produce lumber.”
— West Fraser and Tolko Industries to CFJC Kamloops radio Monday
http://www.cfjctoday.com/article/597979/industry-talks-timber-losses-during-crd-meeting?lipi=urn%3Ali%3Apage%3Ad_flagship3_feed%3BRa60eWUqRP%2BHntDr0J7OSA%3D%3D
North America Wildfire Update: November 2017
Word is starting to come out of the important fibre supply basket for British Columbia softwood lumber producers about how much of the immediate timber that was expected to be harvested has been damaged by the devastating wildfires this season.
North America Wildfire Damage Update: November 2017
At the latest meeting between British Columbia municipalities and the province, Quesnel mayor and council agreed to take a message to Forests, Lands, Natural Resource Operations & Rural Development (FLNRO&RD) Minister Doug Donaldson’s staff on behalf of Tolko Industries Ltd, according to the Quesnel Observer Wednesday.
Noting he was going to be meeting with a number of the NDP government’s ministerial staff as a followup to the recent Union of BC Municipalities, Mayor Bob Simpson asked Tolko External and Stakeholder Relations manager Tom Hoffman what message he would like him to give to them.
Said Hoffman to the Observer, “We need to access to burnt timber and it’s imperative to have a salvage plan, and time is of the essence.
“We’re talking mature trees that were burnt. We need to access those quickly in order to generate the lumber because the longer they sit, the less viable they are.
“The key is to get on with salvage as quickly as we can… and it has to be commercially viable.”
It is going to be expensive to harvest and mill burnt wood, Hoffman added.
BC WOODLANDS POST-FIRE
Gerry Mooney, Tolko’s woodlands manager – harvesting for the Cariboo, talked about the salvage plan.
Based on initial mapping of what has occurred in the region, he said just less than one million hectares of timber has been destroyed and damaged by the wildfires this past season. He noted there has been a big impact on Quesnel, which is Tolko’s western timber supply area, first by the mountain pine beetle and now the huge wildfires.
He added Tolko is working with FLNRO&RD local representatives and First Nation partners to utilize their licenses and help salvage the timber from the wildfires.
Diane Nicholls, BC’s chief forester, is currently assessing whether the amount of timber available for harvest in the Interior will have to be reduced in the future, said the Globe and Mail.
CALIFORNIA WILDFIRE RECOVERY
The wildfires in California this year significantly damaged farmland, rangeland and watersheds, and more than a third of the funding requested, US$3.1 billion, would go toward helping agricultural industries bounce back, including affected wineries, California officials said.
Damage from the recent North Coast fires has totalled more than US$3 billion to date, state Insurance Commissioner Dave Jones said to the North Bay Business Journal Thursday. That figure makes them the costliest wildfires in American history in terms of insured loss.
The total from Sonoma County alone has climbed to US$2.8 billion so far, which alone surpasses the 1991 Oakland Hills fire, with US$1.7 billion in costs at the time, according to the Insurance Information Institute, a national industry trade organization that compiles claims data. The 2015 Valley fire in Lake County had been ranked as the sixth costliest at US$921 million in damages.
The City of Santa Rosa and County of Sonoma have established the Sonoma County Consolidated Fire Debris Removal Pro- gram (Program) to focus on removal of household hazardous waste and other fire-related debris.
REBUILDING?
Meanwhile in the US, it seems California Gov. Jerry Brown and lawmakers asked the US government November 3 for US$7.4 billion to help rebuild after a cluster of fires tore through the heart of wine country, killing more than 40 people and leaving thousands without housing.
Brown said the funding would go toward cleanup and programs to support housing, transportation, agriculture, environmental protection and other services for those affected by the fires.
North America Wildfire Damage Update: October 2017
British Columbia recorded its worst-ever fire season this year, said CBC Monday. Wildfires that began in early April scorched just over 12,000 square kilometres of timber, bush, and grassland and at their height forced 45,000 people from their homes.
Climate change didn’t directly cause major wildfires in Alberta and British Columbia this year but it did contribute to their extreme nature, explained Mike Flannigan, a professor of wildland fire at the University of Alberta, to CBC.
North America Wildfire Damage Update: October 2017
“There have been deadly fires and historic fires in Chile, Portugal — twice — and California,” detailed Flannigan.
“The amount of fire activity in Canada, which currently is about 21⁄2 million hectares — about half the size of Nova Scotia — has doubled since the 1970s.”
“It’s been quite a devastating year globally and the California fires will be the most expensive … (with) tens of billions in losses.”
WILDFIRE RESPONSE IN CALIFORNIA
As for the US, urban-wildlands fire policy in California has developed piecemeal, said professor of fire science at UC Berkeley, Scott Stephens, to the San Fransisco Chronicle October 12. Historically, large-scale urban conflagrations were the result of structure-to-structure fires, fuelled by wood buildings. These types of urban fires are uncommon now because urban areas contain fewer wood buildings, and most buildings include fire alarms, fire-resistant walls, and sprinklers. As the recent fires in California have demonstrated, there is still a long way to go in reducing similar losses in urban-wildlands interface fires.
Despite known risks, people continue to move into wildfire- prone areas at high rates. The issue is particularly acute in California, where a recent analysis indicated that more than 5 million homes are located in the urban-wildlands interface. This number is expected to increase further as urban dwellers seek the “natural” amenities, e.g., open space and recreational opportunities, provided by wildland areas. Similar trends are exacerbated by long-term economic conditions, such as the declining value of rural land uses, such as agriculture or timber, which result in land being of greater value for housing than for other uses.
As homes continue to be built in flammable wildland areas, the Californian approach to building has yet to catch up to the types of hazards faced by homeowners. For example, it is evident that most homes ignite because of windblown embers that can travel more than a mile. At a minimum, vents that resist ember entry into attics and fire-resistant roofing and other building materials are key, yet such requirements are recent, and regulatory enforcement is patchy.
Regulatory approaches aimed at reducing the inconsistencies in local land-use planning should be implemented. One approach would be to require any new development reviewed by a state-level land-use agency, said Stephens to SF Chronicle.
Roseburg Sells, Solifor Buys…
Roseburg Resources, out of Sprinfield, OR, is selling 170,000 acres of timberland in Siskiyou and Shasta counties an Australia management firm, according to the Mail Tribune Thursday. Roseburg has operations in three Northwest states, including a medium density fiberboard plant in Medford, and four Southeast states. The buyer is New Forests, a US$3 billion firm based in Sydney, Australia, with offices in San Francisco, Singapore and New Zealand. It manages more than 2 million acres of land and forests globally.
Last July, Roseburg announced it was building an engineered wood plant planned for Chester, SC, then in September it closed on a deal to secure 158,000 acres of timberland in Virginia and North Carolina.
Roseburg acquired the former Sierra Pine medium density fiberboard plant off North Pacific Highway for US$60 million in September 2015. Medium density fiberboard is produced with scraps and byproducts from Roseburg and other wood products operations here and throughout Southern Oregon, spokesperson Rebecca Taylor said.
Elsewhere, Québec City’s Solifor, which harvests and manages forests on both sides of the border, announced Wednesday it bought its second property in Maine, the Ste-Aurelie Timberlands in Somerset County, for US$30 million. The deal is for the nearly 62,000 acres, or 96 square miles, of forest, which is half the size of the island of Montréal. The former Maine owner’s name was not disclosed.
Solifor last May paid $25 million for 69,000 acres of forest slightly north of the recently purchased land, which abuts the Canadian border, Solifor spokesman Patrick McQuilken said. There are no immediate plans to acquire more forest land in Maine, he said.
US Wildfires Destroyed over 7,000 Homes
The latest word out of Madison’s contacts close to the Softwood Lumber negotiations Tuesday is that — in advance of the next looming ‘gap period’ this time on the anti-dumping duty — there will be some kind of announcement out of US Commerce dept regarding:
” sources are conveying that the AD/CVD aligned Final Determination publication date is being pushed up to as early as the end of this week, or next Tuesday at the latest ”
Jones & Jones Customs Brokers and Trade ConsultantsEmail for Release: jnjrelease@joneschb.comJ&J Website: www.joneschb.com
However, more than the duty the immediate disruption coming fast for Canadian and US softwood lumber producers is the supply shortage of merchantable logs following the epic and disastrous wildfires across northwest North America this summer.
Approximately 100,000 people in California have been evacuated from wildfire zones, and some 7,000 houses and buildings have been destroyed, said the New York Times.
NORTH AMERICA WILDFIRE DAMAGE UPDATE: OCTOBER 2017
Approximately 100,000 people in California have been evacuated from wildfire zones, and some 7,000 houses and buildings have been destroyed, said the NY Times.
In the five-year period ending in 2014, California added 544,000 households, but only 467,000 housing units, according to the McKinsey Global Institute, and the deficit is only expected to grow over the next decade. Napa and Sonoma Counties, where the fires did some of the most extensive damage, are among the furthest behind, building less than half the number of units in recent years that the state reckons were needed to keep up with the population.
California Wildfires Still Burning
Though progress has been made on the big fires, much more work is ahead.
The 48,000-plus acre Atlas fire in Napa and Solano counties was 45 per cent contained October 13 — up from 3 per cent the day earlier, said CNN. The 44,000-acre Nuns fire in Sonoma County — an amalgamation of three recently merged fires north and west of Glen Ellen — was 5 per cent contained.
The 34,000-acre Tubbs fire in Napa and Sonoma counties was 44 per cent under control. The 34,000-acre Redwood and Potter fires in Mendocino County were 10 per cent contained. Details on that:
- More than 2,800 residences in Santa Rosa were destroyed by wildfires, Mayor Chris Coursey said October 12. The number of destroyed structures in the state went up the next day by 2,200 to 5,700, Cal Fire said.
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Wildfires have burned more than 221,000 acres throughout California; 17 wildfires remained Friday, Cal Fire said.
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About 34,000 utility customers were without electricity service — and natural gas service to 47,000 customers has been shut off — mostly in Sonoma and Napa counties, the Pacific Gas and Electric Co. said that Friday.
A total of 235 people were reported missing in Sonoma County alone, where a fire wiped out many homes in Santa Rosa, a city of about 175,000 people some 50 miles northwest of San Francisco.
POWER LINE COLLAPSE
Current Conditions as of October 17:
- Recent reports have cited PG&E’s power lines as a possible cause of some of the current wildfires in the state’s wine country.
- PG&E responded Wednesday by saying it won’t speculate on the causes of the fires but “will cooperate with the reviews by any relevant regulator or agency.”
PG&E’s parent company acknowledged in a regulatory filing Friday with the SEC that the causes of the fires are being investigated by Cal Fire, adding that the probe includes “the possible role of power lines and other facilities” of its utility subsidiary.
FOLKS RETURNING HOME
Cal Fire incident commander Bret Gouvea told reporters at a news conference Wednesday afternoon that within the last 24 hours authorities were able to repopulate more than 6,100 people in Sonoma County to areas they were previously
evacuated, according to CNBC.
More than 220,000 acres have burned in 13 major fires and destroyed 6,700 homes and other structures, including wineries.
REBUILDING BUT SLOWLY
Meantime, the rebuilding process also could be complicated due to insurance claims issues as well as regulations and a shortage of contractors. There’s also a worry the loss of so many homes could worsen the state’s housing supply crunch and the affordability crisis in Northern California.
“They just saw their housing stock drop by 3 percent because of this disaster,” said Christopher Thornberg of Beacon Economics in Los Angeles.
“This is a huge issue. California’s biggest problem now is a lack of housing.”
LOSSES CALCULATED SO FAR
As of that Tuesday night, Cal Fire reported that the Nuns fire and Tubbs fire—the two remaining blazes nearest to Santa Rosa— were both 91 per cent contained, said Curbed San Fransisco.
While that progress is encouraging, the Sonoma County city has already seen neighbourhoods destroyed, which, on top of the immediate humanitarian crisis, will exacerbate the city’s existing housing shortage.
The Sacramento Bee projects that fires destroyed roughly 6,700 homes and businesses in Santa Rosa alone. The US Census estimated in 2016 that Santa Rosa had a population of 175,155 people. In 2010 the city’s housing stock measured at only 67,396 units. More recent census surveys haven’t updated this figure.
The Department of Housing and Urban Development (HUD) said — before the fires — Santa Rosa has an unmet rental demand of more than 1,700 units over the next three years, but has only 200 new rental homes under construction.
“The average sales price of a home in Santa Rosa for 2015 was US$504,125,” according to the city’s 2017 profile report, having risen every year since 2011.
The city previously hoped to add nearly 3,000 new units in the near term but approved fewer than 300 in 2016, according to Santa Rosa’s Planning and Economic Development team.
Meanwhile, the city’s population grew by over 1,000 annually during the last seven years, according to Curbed San Fransisco.