Tag Archives: logs

Lumber Market Pricing

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“What’s going to stop this market?!” is among the questions that lumber traders are pondering these days. Could softwood negotiations be the determining factor? What if the U.S. Department of Commerce throws out the case? More weather-related factors? This time, snow? Salvage logging? Traders taking a position, a stand, …or, a knee?

Back in 1994, when Michael Carliner was Staff VP for Economics at the National Association of Home Builders (NAHB), he wrote What’s Driving Lumber Prices?. In the article, it’s noted that changes in inventory levels create expectations on future levels of activity. It’s accepted that expectations about future supply and demand are key determinants in short-term behaviour of market participants. We’re told that rising prices, such as have been experienced, may of themselves create expectation of further price increases, causing speculative behaviour.

Carliner points out that historically, prices of lumber have not increased gradually with increased demand and constrained supply. Instead, data suggests an erratic pattern of booms and busts that are largely attributable to changes in expectations about future supply. Historically when supplies were not so uncertain, changes in housing statistics and other demand factors were reportedly less pronounced in their impact on short-term market pricing. We’re told that price spikes occurred when market participants were subject to uncertainties in policy, litigation impacting trade, plus the many additional factors that historically impact timing between a tree being felled and being delivered as lumber to market.

What’s different now?

The run-up in lumber prices over the past few months contains some short-term speculative elements, but the underlying trend is toward higher average prices.
– Michael Carliner, Housing Economist (January, 1994)

On this National Tree Day, any image of a tree is music to our ears! Hat Tip: Al Harder (Source: boredpanda.com)

Buried Treasure

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These days much of what constitutes Vancouver’s crazed real estate scenario is taking shape around the urban False Creek shoreline. Glassed-in condo towers in various stages of completion compete with new, nearby downtown towers, including one named Trump. This week I chanced upon what’s at the bottom of much of what’s going up around False Creek; buried treasure from years gone by. Logs. Huge logs.

In what was the industrial heart of Vancouver, over a dozen sawmills, planing mills, shingle mills and wood preserving plants once operated on this 66 hectare strip of waterfront land called Pacific Place. According to the BC Ministry of Environment, most of this land was created by filling in False Creek with construction debris, industrial waste, and fill from other downtown Vancouver building sites. According to the Pacific Place Remediation Project, studies conducted at Pacific Place show that the volume of fill material is enormous – more than two million cubic metres (enough to fill two BC Place-sized stadiums to the rim). The fill is up to 13 metres deep in some areas along the existing shoreline.

Construction workers and even one pedestrian lumber trader were amazed to note the size of some of the buried logs uncovered during present excavations for The Arc Vancouver condo tower on Expo Boulevard at the foot of the Cambie Street bridge. Interesting stories abound on the history of coastal sawmills and the forest industry that was the early economic engine in these parts.

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~Musical Refreshment~

Back-to-School Market Distractions

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We can now add “back-to-school distractions” to the long list of conflicting forces presently shaping lumber markets. According to the Random Lengths Midweek Market Report, “Hot weather, back-to school distractions, and vacations contributed to the lethargic pace” in recent days. Traders likely consider China, multi-family trends in ‘house construction’, abundant global fibre supply, and a weak Canadian dollar to be more impactful factors at the moment.

Even the October 12th expiry of the Softwood Lumber Agreement (SLA) is now in sight. In midst of one of the worst wildfire seasons on record, the Framing Lumber Composite Price has actually drifted lower since peaking in early July. Before the SLA expires, it’s possible that a significantly higher export charge could be triggered for just the first eleven days of October. How might that play out?

Meanwhile, we’re told here “for softwood lumber prices to rise meaningfully, Canada’s lumber industry will have to reduce its current overproduction.” It’s interesting to note that ‘overproduction’ has been one among many characterizations said to have been impacting cyclical lumber pricing patterns over the past 20 years. In today’s post-beetle world, the rationale for perceived “overproduction” strategies among the province’s largest producers is complex, if not confusing to many.

Stoney Lake Lodge 7-28-2015

While fly fishing at Stoney Lake Lodge (27 July 2015) photo credit: ejh

Tall Order

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When BC’s BigTree Registry came into the possession of the University of British Columbia in 2010, “it was a mess of paper records” reports The Vancouver Sun. Confirms Sally Aitken, professor of forests and conservation sciences at UBC: “It consisted of several bankers’ boxes of paper records, maps of various sorts and qualities, some photos and then there was just a single list of trees. It was not something that people could really access information from easily.” Access for all is now just a click away at the impressively concise UBC Faculty of Forestry BC BigTree Website which includes a link to the Registry.

Perusing the Registry, it seems safe to presume the giant tree we encountered last month on a visit to Vancouver Island is identified as tree #102. The biggest Coastal Douglas Fir in Cathedral Grove, the registry verifies measurements for tree #102 as: height 70.1 metres, circumference 10.11 m, crown spread 20.7 m. With a “score” of 645, the tree is presently ranked number 8 in the province, species Pseudotsuga menziesii. It was particularly interesting to discover that two Douglas Fir trees located here in North Vancouver are even bigger. With scores of 675 and 673, they presently hold the number four and five rankings on the list of champions.

Updated 10-17:
An email response to this post from BC BigTree Registry confirms tree #102 is not the giant pictured below. In fact the tree below has yet to be nominated: “The receipt of your photo prompted some interesting discussion and it was discovered that tree #102, last measured in 1990, was greatly reduced in size during the big wind storm in 1997.. it is now only 100 feet tall and no longer the largest tree in the grove.. the Registry will be updated to include this new information for tree #102.”

“This you inherit; guard it well, for it is far more precious than money, and once destroyed, nature’s beauty cannot be repurchased at any price.”
– Quote from Ansel Adams
as posted at UBC Faculty of Forestry BC Big Tree Website

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BC Big Tree Registry ID #102, Cathedral Grove #1 ??

Endless Summer

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Maybe we’re being tricked into believing that summer never ends around here. No question the endless summer contributes to enjoyment of vacations past – even recent ones. The images below are from our Labour Day Weekend trip to the McLean Mill National Historic Site.. aboard the completely restored 1929 Baldwin ex-logging locomotive at the 1912 CPR Station. The track winds through the City of Port Alberni and then the surrounding forest for 35 minutes each way.

Meanwhile, seasonal lumber market activity continues searching for direction. We learned this morning that China’s total log imports are up a staggering 27% year-to-date and lumber imports are up 13% YTD. Interestingly, Mark Kennedy also reports China’s lumber imports from Russia are up 18% YTD, while lumber imports from Canada are in fact down 1% YTD (BC is up 2.4% YTD but down 4% for the month of July). Says Mark, “We have been wary that a slowdown in real estate development activity in China would lower Chinese demand for logs and lumber. This has been our primary concern in 2014. However thus far, there is no evidence of this occurring. This steady demand of logs and lumber in China has helped support North American lumber prices in the face of a slower-than-expected US housing recovery.”

At the same time, proof that summer might not really be endless, even if this province’s teachers strike make it seem so, is offered to us in the release of Jim Snetsinger’s report on Area-Based Forest Tenures which includes results of the public engagement process described in an earlier post here.

“Jim’s recommendations provide a valuable roadmap on how to proceed. However, given the recent Supreme Court of Canada Tsilhqot’in decision and requests from forest companies and communities to focus on key immediate priorities, the ministry will not be proceeding with legislative changes that would enable forest licence conversions in fall 2014 or spring 2015.”
– Steve Thomson, Minister of Forests   28 Aug. 2014

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If a tree falls in the forest..

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Chances are increasing that somebody will hear it.
That according to this report at fastcoexist.com, which tells the fascinating story of an engineer who sought solutions to the problem of illegal logging. “In huge forests around the world, it’s just too easy for someone to cut down trees when they know they won’t get caught. It’s impossible for governments or nonprofits to patrol vast remote areas,” we’re told.

Topher White’s creative answer reportedly utilizes recycled cell phones, a monitoring system of pods equipped with microphones programmed “to recognize distant chainsaws in the middle of the cacophony of usual jungle sounds.” When the solar-powered devices were first tested in Indonesia, White’s team at Rainforest Connection successfully received an alert of illegal activity within three days. The loggers were caught. Says White: “..People can more or less get away with whatever they want the farther they are from any sort of accountability. By putting accountability into the equation, it allowed the situation to more or less resolve itself.”

We’re told that White’s company is now working on a pilot to monitor 7,000 square kilometres of protected rainforest in Cameroon. Confirms White: “We’re covering that area with 30 old cell phones.”

Logs and Blogs

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Log exports have long stirred more controversy in B.C. than blog exports. For one thing, there are more regulations imposed on log exports than blog exports in this province. It’s mostly readers who determine acceptable blog reporting in this space.

In today’s Vancouver Sun, an associate professor of economics at Thompson Rivers University in Kamloops argues that many of the rules surrounding log exports impose needless costs on producers and owners. He points to a new study on log export policy for B.C. which concludes that a combination of free trade in logs and the export quota policy now in place yields much larger benefits to B.C. than an outright ban on log exports. In fact, “streamlining the export process, while continuing to restrict exports, will ensure B.C. gains the most value from its forestry resources,” we’re told.

According to the professor, “free trade in logs is a more desirable policy when a global perspective is incorporated.”  In the face of China’s fibre deficit no doubt, he explains that if all log export restrictions were removed as part of an Asia-Pacific trade agreement, concessions of a similar size could be leveraged to the benefit of B.C.

“If the B.C. and federal governments are intent on building a healthy and sustainable forest industry in British Columbia, consideration should be given to streamlining the log export process in the short term while looking to free trade in the long term as negotiations further develop.”
– Joel Wood

Lumber Reserves Base

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SinoShip News reports today that construction is underway of China’s first ever “lumber reserves base” (war of the woods?). Situated by the Suifen River on the border between China and Russia, the timber base reportedly represents a RMB2bn (US$320 million) investment by the China Forestry Group Corporation (CFGC). We’re told the project will occupy 335,000 square metres of land and will include a timber processing centre, spot trading centre, logistics centre, distribution centre, and a free of heart centre.

The full report here notes “China consumes nearly 500m cubic metres of timber each year, 50% of which are imports. In order to solve the supply shortage, China will choose nine ports including Tianjin, Zhangjiagang, Taicang, Zhangzhou and Shenzhen to deploy an import timber trading network.” Hashtag FibreDeficit?

~Canadian Forest Products Export Markets~

Canadian Exports

Source: fpac.ca

In praise of Log Exports

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TimberWest’s president and CEO Brian Frank says here: “Without access to log-export markets, there is no viable forestry business on the B.C. coast and none of the 1,000 direct jobs provided by TimberWest in the stewardship of private managed forest land would exist today.” He notes “domestic markets currently pay about half of what export markets like China do for the same log” and that “TimberWest relies heavily on export log sales to subsidize domestic pricing.”

As to sustainable forest management, the CEO confirms the company’s commitment “for many reasons, including social-licence interests and regulatory requirements. Ultimately, though, TimberWest’s owners are committed to sustainable forestry because they own the lands and have a vested interest in managing for the long term.” Frank was responding to this letter to the editor at Times Colonist, which he says includes “some assumptions about private forest land management on Vancouver Island that are worth correcting.” (HT: R. Falletta)

There’s certainly lots in the local news these days pointing to differences between sustainable practices and ecological sustainability. A court ruling just last week on coastal Douglas Fir logging “confirms the deep systemic problems in B.C.’s forest management” according to Valerie Langer, Conservation Director for ForestEthics Solutions, who claims it is “anything but sustainable”. The Western Canada Wilderness Committee and ForestEthics Solutions Society had argued that the province has a statutory duty to protect the dwindling number of ancient trees from commercial logging. That duty was ruled to be discretionary, not mandatory, according to the full report from Vancouver Observer.

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“Walking Sticks” – hiking with Grandad, Bowen Island, May-10-2014

From Log to Blog

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It used to be that the familiar story ‘log-to-lumber’ offered up information sufficiently satisfying. No more. So it’s not surprising to note that the simple addition of a “b” has taken wood’s story in a natural progression of things – from ‘log-to-blog’. I recently happened upon a couple of excellent examples of how the narrative has expanded:

  • No fewer than ten different blogs are actively maintained at Weyerhauser’s website. Each features fresh and interesting content. At their “Word on Wood” blog, you can learn here how a new multi-storey, wood-framed condominium is boosting sustainability in Vancouver. Or, you might want to travel back in time to 1922 here, and join eight lumber traders on a train tour of sawmills in the Midwest. The blogger confirms that “the purpose of the expedition was to inform and educate the salesmen about the manufacturing mills and products so they could better serve their customers.” It’s doubtful any of those travelling salesmen anticipated that their scribbled notes along that journey would form the basis of a fascinating blog post over 90 years later.
  • Marketing consultant and self-described “hype-free social media and content strategist” Jay Baer has been building on this theme of ‘engagement’ at his popular blog here. In a recent post, he showcased the new website Coca-Cola Journey. Baer tells us that Coca-Cola concluded that “the corporate website is dead”, before embarking on a new design inspired by the power of storytelling. The result is “a highly engaging destination with content on par with lifestyle and news websites,” says Baer. He adds that “as a leader and innovator, Coca-Cola is again showing what’s possible”.