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Madison’s Weekly Softwood Lumber Prices: July 16, 2021

Madison’s Weekly Softwood Lumber Prices: July 16, 2021

MADISON’S SOFTWOOD LUMBER MARKET WEEKLY COMMENT:

Key comment: “The market continued to search for a tradable bottom as most buyers held off for another week.” 

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Madison's Softwood Lumber Benchark green and KD Construction Framing Dimension Softwood Lumber and Panel Prices JULY 2021
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Prices reflect week of July 16, 2021 (CLICK TABLE TO ENLARGE)

European timber industry companies sign petition for log export ban

More than 9000 European wood processing companies have signed the “Stop Log Exports” petition to be submitted to the European Commission.

Originally the petition has been prepared by the French National Timber Federation and focused on the export of oak logs, but was quickly expanded to include logs in general to keep the domestic economy viable.

Started in France to put pressure on the government there, industry associations from Germany, Spain, Slovakia, Bulgaria, Italy, the Netherlands and Poland soon joined. But there are also critical voices about this idea, which could, for example, lead to delays in the transport of logs out of the forest if domestic demand falls and exports are prohibited.

Content of the petition

”The Member States of the European Union and the European authorities must act decisively and quickly to save the wood processing industry. At stake is the future of a key element in the wood sector, as well as the recovery of the economy.

Without raw material supplies, the crisis will have direct consequences for other related sectors (industry and crafts, construction and logistics), which will not be able to source materials from Europe and will be dependent on imports from outside Europe.

There is no doubt that the crisis in the supply of timber to sawmills is as violent as ever and will only get worse. The time has come to wake up and acknowledge that European sawmills will soon be in danger of closure and decommissioning if action is not taken to contain the losses that are taking place right now.

In 2020 18 million (m3) softwood logs were sold outside Europe. This is a doubling of the quantity compared to 2019. In the last 6 months, this raw material outflow has doubled. The same has been happening for years with beech and oak logs, causing European production to decline. This applies to all types of wood, even pulpwood is shipped for production.

We are experiencing strong global demand which is causing supply tensions in all sectors. The only guarantor of economically and ecologically stable supplies to the European Union market is the European wood industry. Did we learn nothing from the episode of masks and vaccines?

The demand of entities from outside Europe will increase tenfold due to the passivity of European governments, Russia’s decision to ban the export of unprocessed raw material, and China’s strategy based on sourcing raw materials. European producers need resources to work and fuel the economy that are being plundered without limit.

This situation now affects all sectors (carpenters, construction companies, retailers and traders) and supply problems are felt in all countries. They are unable to secure the stability of supplies in international markets. Disruptions in the supply chains (packaging, transport, etc.) affect the logistics sector if pallet manufacturers cannot find the wood materials they need on site. This economic and environmental nonsense aberration must end now.

Today, Europe shows a strong political will to change its environmental profile and reduce CO2 emissions. Assuming that wood, as the building material of the future, will achieve these goals. On the other hand, mass export of wood raw material destroys all these assumptions, emitting more CO2 during transport to the other side of the world than the tree has stored in its lifetime.

Without securing the supply of raw materials, European producers cannot invest and modernize companies. Europe is one of the last regions in the world not to have a strategy to valorize its natural resources. Through our work, we, wood processing companies, build a European industry that is what Europe should be like: Modern, Responsible and Sustainable.

The services of the Member States and representatives of European institutions have allowed this toxic practice for 10 years. We are currently on the brink of a precipice.

Permission to export European raw material without ensuring strategic and priority supplies for our industry is synonymous with:

  • depriving the wood industry of self-sufficiency
  • the destruction of the sector that provides local jobs
  • a threat to the craft, construction and logistics sectors
  • turning away from our ecological ambitions
  • the work of our predecessors to be wasted and the inability to provide our children with a future in this industry.”

The post European timber industry companies sign petition for log export ban appeared first on Timber Industry News.

German wood prices expected to rise further by 30 percent by the end of the year

The German economy is threatened with further massive restrictions due to material shortages and burdens from rising prices for raw materials and intermediate products. The sharpest price increase in raw materials is recorded in wood, which is now twice as expensive as in September 2020. 

And there is no end in sight : “Every two to three days, raw material prices are adjusted upwards. North America and China are setting the trend, where prices are already a third higher than in Europe, ”says Horvath pricing expert Danilo Zatta.

For wood, the German manufacturers surveyed expect an increase of up to 33 percent by the end of the year. This is driven by a sustained high level of construction and renovation as well as the increasing demand for furniture.

The wood suppliers can hardly keep up and fear further supply chain problems if the countries react with restrictions to exponentially increasing delta virus variants. The Siberian larch, which is in great demand in Germany, is still in short supply as a result of previous lockdowns.

Because of high wood prices more spruce should be felled

Anyone who needs construction timber currently has to be patient – and dig deeper into their pockets than usual. In order to ease the situation, German Minister of Economics Altmaier apparently wants to have more healthy spruce felled again.

Federal Minister of Economics Peter Altmaier wants to have more spruce felled again in view of the high prices for construction timber and ongoing delivery bottlenecks. To this end, he wants to lift the current logging limit for spruce wood as quickly as possible, quoted the “Rheinische Post” from a proposal paper from the minister. The paper is entitled “Proposals for measures to improve the supply of wood products and other building materials and intermediate products.”

Altmaier therefore wants to strive for an agreement with the responsible ministries on the implementation of the proposals during this legislative period. “We are dealing with conifer timber products with price increases averaging around one hundred percent within the year,” the document says. Construction companies that had previously bought wood “just in time” for specific orders could no longer accept new orders despite the good economic situation. There are also delivery bottlenecks and price increases for other building materials.

Corona slows the timber trade

The reasons for these developments are complex, it is said. “Forest damage and bark beetle infestation reduce the amount of fresh wood and drastically increase the amount of damaged wood.” The sawmills had reached their capacity limits due to the amount of damaged wood. In addition, there are political factors that slow down international trade in wood as a raw material, as well as corona-related reductions in production and disruptions in the supply chains. “We must resolutely counter these critical developments affecting the construction industry, the building trade and the timber industry.”

The current limit on the felling of spruce wood continues until the end of September. In return, the forest owners receive tax advantages. Altmaier wants to continue this, even if the impact limit is to be lifted immediately. The federal, state and local governments should also use the permitted leeway for public contracts in order to “compensate as far as possible” for price increases in the procurement of necessary building materials, Altmaier writes in the paper.

A large part of the wood is exported

Another suggestion is that if a service is delayed because of the scarcity of raw materials, the public sector should forego contractual penalties. Damaged wood that has previously been sorted out and exported will also be used in Germany in the future.

At the moment, the construction industry in particular is complaining about the lack of raw materials and the drastic prices for wood. In addition, a large part of the wood from Germany is exported abroad, especially to China, because demand there is currently particularly high.

The post German wood prices expected to rise further by 30 percent by the end of the year appeared first on Timber Industry News.

US OSB prices increased by 510% since the beginning of the year

US OSB prices increased by 510% since the beginning of the year

The price of OSB has increased 510% since January 2020, exceeding the peak price increase in lumber by nearly 180 percentage points in the USA, as the National Association of Home Builders (NAHB) reported.

Although plywood panel prices have substantially increased over the past 18 months as well, the increases have been less than half those seen in the OSB market. In addition to elevated prices, acute shortages have plagued the residential construction industry — particularly after the severe winter weather experienced in the south in February.

Prices and price fluctuations vary depending on use and location, with increases since the start of 2020 exceeding 650% for some OSB products.

OSB accounts for the most wood product used in structural panel applications in new construction. For example, OSB accounted for roughly two-thirds of wood panels used in wall sheathing in 2019.

Depending on the location of a build, the thickness of OSB sheathing in wall applications is generally 3/8″ or 7/16″ (with some use of 15/32″). The mill prices of these dimensions (shown below) have climbed an average of 491% since January 2020. The “delivered” price of 3/8″-thick OSB sheathing in Portland, Oregon, has climbed an incredible 662% over the same period.

Oriented strand board is heavily relied upon in roofing applications as well. Roof sheathing comprising OSB made up nearly two-thirds of all roof sheathing in 2019.

OSB sheathing used in roofing is typically 7/16″ and 15/32″ thick because it is intended to resist “racking,” resulting from high winds or earthquakes, and support heavy snow loads. In areas with minimal snow loads, building codes may allow for the use of 3/8″ OSB.

As lumber prices recede, more attention must be given to the stratospheric price level of OSB.  OSB, like framing lumber, is an integral home building material. The wide usage of OSB in new home construction should lead the market to shine a greater spotlight on OSB prices and scarcity.

The post US OSB prices increased by 510% since the beginning of the year appeared first on Timber Industry News.

Chinese H1 log imports grow sharply, while sawn timber purchases crash

According to data released by the China customs, in the first half of 2021, a total of 31.61 million cubic meters of logs were imported across by China, an increase of 28.91% compared to the 24.52 million cubic meters of imports in the same period last year. However, last year, imports were sharply reduced due to the coronavirus pandemic.

A total of 14.07 million cubic meters of sawn timber was imported in China from January to June, a decrease of 6.73 million cubic meters from the same period last year or 38.81% year-on-year.

However, after reaching a peak of 6.35 million cubic meters in September last year, China’s log imports are basically in a state of slow decline. Although the arrival peak in December at the end of 2020 again exceeded 6 million cubic meters, it remained at around 6 million cubic meters from January to June this year. The monthly import volume has maintained a year-on-year increase of 20%-30%.

Since the import volume in May 2020 was only 3.3 million cubic, the import volume in May of this year increased by as much as 60% year-on-year.

Another trend in log imports is the increase in the average price of log imports, especially in June. In June, log imports increased by 23.8% year-on-year, and the value of imports reached US$1.128 billion, an increase of 55.3% year-on-year.

The post Chinese H1 log imports grow sharply, while sawn timber purchases crash appeared first on Timber Industry News.