JUNE 2023
Cover: Softwood Lumbermen Tone Down Optimism . . . So Do Hardwooders
While U.S. softwood lumbermen aren’t as upbeat as a year ago, they’re still upgrading their mills, and maybe building new ones. Market conditions are getting tougher and many hardwood lumbermen are having to toughen up for the challenge.
Inside This Issue
THE ISSUES: Maybe The Markets Will Surprise Us Once Again
If you didn’t notice it on the cover, your eyes are getting as bad as mine, but yes this is our annual U.S. Sawmill Operations and Capital Expenditure survey report. It doesn’t pretend to be as precise as a presidential election poll, and there’s no figuring for margin of error here, but it is a solid indicator of what U.S. lumbermen are feeling—where in the mill they’ve been spending their money, where they plan to spend it, and how much. Sprinkle in a few comments on markets and mill operations, as many lumbermen did, and one starts to get a clear picture—at this point in time.
Article by Rich Donnell, Editor-in-Chief, Timber Processing
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Mixed Outlook
Article by Rich Donnell, Editor-in-Chief, Timber Processing
What a difference a year makes! Remember last year at about this time, when U.S. softwood lumbermen were very positive, based on Timber Processing’s annual Sawmill Operations & Capital Expenditure Survey?
At the time, 85% of the lumbermen who responded to the survey forecasted their business situation for the remainder of 2022 and 2023 as excellent (19%) or good (66%); that was down slightly from the year before, when 92% felt excellent or good for 2021 and 2022.
But remember when the pandemic hit, just as this annual survey was being conducted, and only 33% said excellent or good for the remainder of 2020 and 2021. Obviously not many forecasted the super-record-breaking lumber prices and the rebound of the housing market, which would occur over the next two-plus years.
But as of today, many softwood lumbermen have again adopted a lukewarm stance, if that. According to the results of the most recent annual survey, 42% of the softwood lumbermen forecasted excellent or good for the remainder of 2023 and 2024, and of that only 2% said excellent while the remaining 40% said good.
Nearly half (49%) of the respondents forecasted 2023-2024 as fair, compared to 11% a year ago, while 9% said poor, compared to 3% a year ago.
“Not as good as the previous couple of years. Headwinds for sure until interest rates drop,” commented Timothy Biewer, principal of Biewer Lumber, which operates two new sawmills in the South and several mills in Michigan and Wisconsin.
Getting Tougher
Article by Rich Donnell, Editor-in-Chief, Timber Processing
American hardwood lumbermen are considerably more skeptical over their lumber business situation for 2023-2024. Only 22% forecasted their business during this year and next as good or excellent, compared to 75% who said likewise a year ago in TP’s annual U.S. Sawmill Operations & Capital Expenditure Survey, and 88% who said the same two years ago.
In fact, no lumberman who responded to the survey expected it to be excellent, while 22% said good, 67% said fair, 8% poor and 3% forecasted very poor. Compare those numbers to a year ago when 13% said excellent, 62% said good, 21% at fair, 3% said poor and 2% forecasted very poor.
The current lack of optimism is actually more in line with how hardwood lumbermen felt three years ago in spring 2020 with the uncertainties of the pandemic rolling in, when only 18% forecasted their business as excellent or good. A whopping 45% forecasted it as poor back then, much more dramatic than now, though most of the doomsayers were proven wrong in the next year.
“Extremely difficult situation,” commented James Pierce, president of Pierce Lumber in Iowa. “Hardwood lumber prices are down over 50% for most species since 2020. Private landowners are not willing to sell timber at depressed pricing. Chinese log buyers are buying walnut and white oak logs at prices that are higher than the dry lumber is selling for yet have freight and processing costs to make them into lumber. This country needs to stop allowing logs to be sold to the Chinese. Domestic markets are weak. Mill capacity is too high for these markets. Not encouraging.”
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