Lumber Companies Take Advantage of Historic Margins

Originally published by the following source: SBC MagazineJune 11, 2018
by TJ Jerke and Sean Shields

  

As lumber costs remain at historically high levels, lumber companies are investing those profits into strengthening their positions and increasing production capacity.  

Data reported by Random Lengths for the month of May had Eastern Southern Yellow Pine 2x4 STD&Btr/#2&Btr at $687 per thousand board feet, up from $608 in April and $457 in May 2017. Western SYP 2x4 STD&Btr/#2&Btr monthly average was at $634 in May, up from $552 in April and $388 in May 2017. For 2018, the cost of SP 14’ 2x4 the first week in January sat at $525, hit $660 per thousand board feet in March, dropped in April and May and is now at $645 (click on the image for a larger view).

Vancouver’s Conifex will triple the companies’ capacity in the southeast part of the country after spending $258 million to purchase the Suwanne sawmill in Cross City, Fla. and the Caddo River mill in Glenwood, Ark. The purchases will add an additional 50 percent more capacity and bump their total output to 1.1 billion board feet.

Canfor Corp. (a Canadian lumber company) announced in February that it was also expanding capacity in the U.S. southeast with the construction of a $155-million sawmill in Washington, Ga.

Resolute Forest Products, (another Canadian lumber company) announced in April the company’s $12.9 million investment at its La Dore facilities in Quebec to automate and expand capacity while also becoming more energy efficiency.

Meanwhile, Boise Cascade Company (a US lumber company) is expanding further into the Oregon market with plans to acquire pieces of Norman Distribution, Inc. a distributor of engineered wood products and building materials in Medford, Oregon.

In Lufkin, Texas, a new $100 million softwood lumber plant is set to be online the second quarter of 2019 after Angelina Forest Products (a US lumber company) purchased the former General Electric Buck Creek site. The new plant will generate more than 100 full-time employees, produce more than 220 million board feet a year, and push out 200 trucks of finished lumber every week.

These long-term investments indicate, at least anecdotally, the lumber industry is confident both lumber demand and lumber costs will remain strong for the foreseeable future.