Rising lumber demand looks solid – what about loggers?

Purchases climbed 8.3 per cent to an annualized pace of 497,000 homes

Sales of U.S. new homes rose in June to the highest level in five years, a solid sign that B.C. lumber producers can expect demand for lumber to keep rising, say industry analysts. “Our mills are hiding their smiles behind their caps right now, because it’s looking pretty good,” said Keta Kosman, publisher of Madison’s Lumber Reporter. “For B.C. lumber, this is a leading indicator there will be new home building.” Purchases climbed 8.3 per cent to an annualized pace of 497,000 homes, the highest level since May 2008, the U.S. commerce department said last week. Although there’s still uncertainty over real estate sales, banks and mortgage rates, momentum is beginning to build, Kosman said, adding that raises another concern – milling capacity is down from where it was seven or eight years ago because numerous sawmills have shut down. One thing analysts haven’t said much about the supply-demand situation on the logging and trucking side of the industry. As market demand for lumber rises, we’ll hit a point where there aren’t enough contractors to get all the required harvesting done. Lack of contractors will be a bigger threat than milling capacity, and if there’s a lesson in the above, it’s this: Forest companies would be wise to solidify their contractor support to ensure enough logs can be delivered before they worry about mill expansions. With lumber prices rising, the old “cry poor” tactic doesn’t work. It’s time to get serious about paying logging rates that are profitable enough to keep loggers anchored in forestry instead of heading to other resource industries where the pay and the opportunities are better.

Submitted by Central Interior Logging Association