24 WESTERN PALLET
Key points:
• The tight market conditions in softwood lumber markets during 2018 unlikely to repeat in 2019.
• North American softwood lumber production undergoing dramatic shift based on timber supply.
• The US China trade dispute will reverse recent growth in both log and lumber exports.
• There are other challenges to expanding lumber supply.
North American Lumber Trends
The tight lumber markets we’ve seen into 2018 shouldn’t persist into 2019, according to Rocky Goodnow, who spoke early this month at Interpal 2018 in Minneapolis. Goodnow is Vice President of the North American Timber Service at Forest Economic Advisors LLC.
“The first thing on most people’s lists was what was going on with the SLA, the softwood lumber agreement," he said. It definitely had an impact in increasing prices.” It was exasperated by BC’s worst fire season on record, and one of the “more significant fire seasons” in the US West.
“It led to a lot of loggers being pulled out of the woods, and lower log decks,” he said. Inventories were also impacted by severe transportation issues early in 2018, primarily in BC, which experienced rail availability problems.
And while supply was constrained, demand turned out to be surprisingly strong. Housing starts as well as repair and renovation activity were stronger than anticipated, leading to higher prices. July 2018 shipments from U.S. mills is up by 5% versus the previous year.
Rocky Goodnow
Canada started out the year very slowly because of transportation and SLA issues, but now has caught up and is exceeding previous year volume. Goodnow said the industry is starting to get into a better position from an inventory standpoint.