Plywood sales picked up last week after a four-week lull. Industry rumors indicate that Canadian producers, who have been underwater on pricing versus production costs (according to Random Lengths), found a bottom to pricing and pushed order files into the third week of March. While we haven’t built inventory during the purchasing lull, even moderate price discounts are painful with cost inflation that we have experienced over the last couple of years.
We have successfully restarted Swing Shift at our small log plant in anticipation that better markets are ahead of us. Veneer sales are strong, particularly from engineered wood producers. Engineered wood is our most important market sector as we strive to buy the highest quality timber available that leads to a higher volume of LVL veneers.
The strength in this portion of the market is encouraging. I don’t think we’ve seen the return to full production schedules, yet, so there is more demand to come when the market shows further signs of life. We are pushing hard on veneer prices to try and get some equilibrium between log costs and veneer pricing.
After a month of slower production at our Mass Ply facility, largely due to project schedule changes and bank financing issues for large projects, it looks like we will have at least a couple months of Mass Ply Panel (MPP) projects ahead of us. We also have very interesting projects moving forward using Mass Ply Lams to replace glu-lams in large buildings.
A local project that we are happy to help support is the Ty Hart Fitness Center at Stayton High School. Lance Corporal Ty Lewis Hart was one of the marines involved in a tragic helicopter crash off the coast of Oahu on January 14th, 2016. Ty grew up in Stayton and it is wonderful to see a local landmark recognizing a young man who served our country.
The most foreboding issue we face is the cost of logs. The disastrous Private Forest Accord promoted as compromise between environmental groups and industry is significantly hampering log supplies from private producers. The Habitat Conservation Plan, while not yet in place, has chilled investment in facilities and has caused many operating mills to reevaluate their operations.
Hampton announced the permanent closure of their Banks, Oregon, sawmill earlier this year. Rosboro announced the temporary curtailment of production at their commodity stud mill in Springfield, Oregon, citing “an ongoing imbalance between local timber costs and market pricing for commodity lumber.” These two announcements alone account for 100 lost jobs in the industry.
Our government seems to believe that they can have a vibrant wood products economy without any timber to process. It is hard to build affordable local housing under the governor’s signature aim to build housing units to alleviate our current housing shortage if we have no wood to build those houses with. Unless, of course, the goal is to import all our wood products from elsewhere.
We believe the market is ready to turn and there are good markets ahead. Poor weather, including flooding in California, might have delayed that a bit — but we think it is coming.
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