Wood Products Market Report: Trends and Insights

The rain hasn’t let up in Oregon, but the sunshine looks to be around the corner. The mountains have plenty of snow and it looks like the spring skiing will be extraordinary this year.

March has brought significant improvement to wood products markets. Plywood prices are going up and the volume sold each week is improving. It may be a bit too soon to call it a strong trend that will persist through the coming months, but there are strong signs pointing to upcoming strength.

The strength in OSB is the most significant indicator. OSB prices have improved almost $100 over the last month, and are currently approaching current plywood prices at equivalent thickness. Southern Yellow Pine panel prices are trading at a premium to Western fir pricing. As Western fir plywood producers, it is frustrating that a superior product like plywood would trade at a discount to OSB. That said, the ubiquitous use of OSB for residential construction, and the potential of OSB to trade at a premium to plywood, always supports higher panel prices.

Veneer sales have been strong, and prices have been increasing at a consistent clip. LVL-grade veneer is still leading the charge in volume purchases, however, there is more recent interest in white fir veneer in thicker peels. Unfortunately, veneer prices still haven’t caught up to exorbitant log prices in the Pacific Northwest. Lumber and panel producers are still suffering with return back to the log. There is little sign, yet, of a significant decrease in log prices.

The state of Oregon is still hellbent on destroying any natural resource economy that we still have in Oregon. This last week they continued the relentless kowtowing to environmental interests by passing the Habitat Conservation Plan (HCP) through the Board of Forestry. This misguided plan will reduce beneficial forest management on state lands by an estimated 34%. Our habitats will not be conserved, rather they will reduce lands available to forest management, resulting in state neglect and higher tree mortality. These past years of increased forest fires, poor air quality, rural communities suffering from lack of funds, and devastating forest fires haven’t taught them any lessons. Prepare for more of the same.

And yes, these policies do result in higher wood products prices, which is exactly contrary to the Governor’s goals of making housing affordable and available to Oregonians. Timber products companies read the tea leaves and procure timber under multiple year contracts. We are currently looking three to five years out and see no interest from our state in supporting our industry. The direct result is three mill closures and one significant indefinite curtailment in the last three months leading to more than 300 people losing their jobs. An estimated eight additional mills will close soon to realign with the volume of timber now being offered. Oregon politicians have little regard for rural workers.

The mass timber markets are showing more life after the shock of rising interest rates to combat inflation. The anticipation is that there will be rate decreases prior to the presidential election and developers intend to have projects ready when market conditions improve.

All in all, the next few months look positive, barring any significant geopolitical or economic events. We are running full schedules at all of our facilities and intend to increase our production in the near future. Labor issues have begun to ease, which is a welcome change, and the improvement is starting to have a beneficial effect on our production. Thank you to everyone who shows up to work, works hard, and helps us make a high-quality product. We are very appreciative!