Timber producers expecting stronger demand for lumber
As a large segment of the U.S. popula- tion—those in their early to mid-30s— drives demand for housing, he said he ex- pects demand for timber to continue. He noted low housing inventory for buyers will increase demand for new construction. The U.S. is expected to consume about 50 billion board-feet of lumber this year. The figure includes end-use markets, from housing starts to residential improve- ments, nonresidential construction and industry markets. California consumption represents 9% of the U.S. supply, about 4.5 billion board-feet.
Rising costs and added regulations, Andersen said, affect the bottom line of timber operators. “Due to the cost of diesel, our loggers are coming in with higher hourly rates,” he said. “And with the air resources board looking at zero-emission forklifts, we’ve got 60 or 70 forklifts we’re going to have to turn over to electric, and that’s going to be a very significant cost to us.” California timber operators said the influx of wildfire-salvaged logs, which
By Christine Souza Timber and forest products sector lead- ers and market analysts say warmer tem- peratures mean a return to a more typical seasonal demand as construction and home improvement projects resume after the winter slowdown. They say the timber market should fare reasonably well this year, despite rising in- terest rates affecting new home purchases. Dennis Webb, chief forester of Davenport-based Big Creek Lumber, a family-owned wood products company that produces mostly redwood and op- erates a sawmill and six retail locations, said higher interest rates have led to a modest decline in prices for most species of timber. But he said, “On the flip side, consum- er spending is still fairly strong. Timber markets have been a little more resilient than you’d expect given the rapid rise in interest rates.” John Andersen, forest policy director and registered professional forester for Humboldt Redwood Co. and Mendocino Redwood Co., both of which specialize in redwood and Douglas fir products sold at home improvement retailers, said he ex- pects demand to increase soon. “Once things warm up, people start thinking about projects that use wood products, and we will have maybe some- what of a normal year,” Andersen said. During the pandemic in 2020 through 2022, California timber operators said there was strength and optimism in the market as demand skyrocketed for har- vested logs and lumber products. With people sheltering in place during the pandemic and timber and forest prod- ucts declared as an essential business, the sector experienced a doubling—and in some cases a tripling—of lumber prices as inventories were depleted. People turned to neglected home repair and remodeling projects, and customers waited in long lines outside improvement stores to purchase lumber for decks, fenc- ing and other home needs. At the same time, demand for new housing construction, which represents a major indicator in domestic lumber prices, increased. A single unit of housing requires an av- erage 15,000 board-feet of lumber. In late- 2019 to early 2020, housing starts in the U.S. peaked at 1.6 million units. Lumber market analyst Rocky Goodnow, vice president of timber at Massachusetts-based Forest Economic Advisors, said with shelter-in-place rules rescinded, interest in timber has returned to pre-pandemic levels with improved de- mand for harvested logs and lumber in the spring and summer. “From a wood products and lumber market perspective, we’re off the highs that the markets reached in ‘21 and early ’22,” Goodnow said. “We’re starting to see pos- itive signs for demand in housing starts, and we continue to see strong numbers on
the repair and remodeling side.” Goodnow said he expects the U.S. econ- omy to enter a recession in late 2023. But he said the timber sector may be able to withstand a potential downturn. “Generally, we think this sector is likely to outperform the overall economy because there’s still a lot of strong fundamentals that we think is going to help,” Goodnow said.
See TIMBER, Page 9
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