October Market Report: The Future of the Wood Products Market

October 16, 2017

What is the value of a floor? What is the value of a completed structure? If Freres Lumber could provide every primary structural wood element within a building, what would those elements be worth?

A New Way Forward for Wood Products

Freres Lumber’s products and markets have generally been fairly easy to quantify due to the nature of commodity markets. Veneer and plywood have been aggressively traded nationwide for decades, which allowed the development of trade journals and price publications that publish commodity pricing twice a week. We set the sales pricing for all of our products, but the general value of most panel products are well known on a daily basis. In a very short period of time the commodity pricing structure for our company will be changing dramatically. The products we are looking to sell in the future will more likely be based upon the structure and attributes of the products than upon the volume or grade of the products themselves.

Mass Timber Construction

What is the value added to the wood we sell? The general answer is that the construction industry does not yet know. The value is a complicated interplay between wood cost and prefabrication versus lower labor cost, higher-quality, and much quicker construction. While there is still significant risk for developers and architects to pursue Mass Timber Construction, our discussions with the people who develop, construct, and live in Mass Timber buildings indicate that the time is now and the interest is real. Our messages are very tangible and quantifiable. Wood is the only truly renewable construction material. Wood is a marvelous carbon sink that has true potential for carbon sequestration. Wood is easy to work with and easily prefabricated.

We are ahead of the game for this market, it may take years to fully develop. In a very interesting way, we are all pioneers in working with a new material and new type of construction. We hope that it will soon become the norm.

Freres Lumber Company’s Mass Ply Panels

The Mass Ply Panels we will be producing in the coming months require the coordination of all of the company’s operating plants to produce effectively. We will use the high-quality veneer from our lathes to produce structural composite lumber at the plywood plant to send to the Mass Ply plant for final production. We are all part of the process. There is not a production facility in the world that is attempting the product we are all attempting. It will be a very interesting ride.

Wood Products Markets Continues to be Strong

Markets are very good for our primary products right now, almost across the board. Veneer is in strong demand and plywood is still selling briskly. The strength of our order file is the biggest impediment to selling additional volume. LVL producers lament the continued rebuild of our Plant 4 facility and look forward to the approaching restart of the dryers there. We hope to soon be back to normal operations.

Log prices and availability are still our biggest concern going forward. The recent rain followed by mild weather has been a boon to incoming logs. We hope the mild conditions will continue to allow adequate logging and hauling going forward.