Lumber prices down sharply; Tricon announces layoffs

A weak Loonie, an expiring softwood agreement and poor demand from Asia has lumber prices down sharply in the Pacific Northwest.

F.H. Stoltze Land and Lumber in Columbia Falls has not had any layoffs due to the poor pricing, general manager Chuck Roady said Monday, but Canadian firms are certainly doing their best to undercut U.S. prices, sometimes by as much as $130 to $140 a thousand board feet.

Adding to the problems is an expiring Softwood Agreement between the U.S. and Canada. The agreement, which has been in effect for decades now, placed a tariff on Canadian imports. But it's set to expire Oct. 12 and when it does, Canadian lumber could flood U.S. markets. If another agreement isn't struck between now and then, there will be no agreement for another year in what's known as a one year "stand down."

While Stoltze hasn't hasd any layoffs, Tricon Timber in st. Regis announced it was laying off 90 employees, the Missoulian reported today.

Roady said optimally the next agreement would include a volume quota to protect U.S. mills. Montana's congressional delegation last week urged the Forest Service to at least give mills some temporary help.

One way to do that is to extend the term on existing contracts, said Montana Wood Products Association spokeswoman Julia Altemus. That would give mills more time to pay off existing contracts.

But both global and domestic forces are hurting the market, said Shawn Church, editor of Random Lengths, a wood products trade publication and market tracker. Church said the composite price for dimension lumber is currently about $297 a thousand board feet, compared to $394 a year ago.

The exchange rate is helping Canadian lumber companies, as the Canadian dollar is worth about 75 cents on the U.S. dollar. Also, Asian markets are weak and the U.S. housing market, while showing a rebound in multi-family units, hasn't fully recovered in the single family residential sector, Church noted. Multi-family units use about one-third less lumber per unit, Church said.

Adding to the woes in the region is the lack of logs. With federal sales down there's increasing competition for private and state logs in Montana, Roady noted.

Locally, there could be some salvage sales from recently burned forests. The Forest Service recently advertised a small sale of logs from a shaded fuel break that was cut from around the Spotted Bear Ranger Station. That sale is small, about 55,000 to 60,000 board feet.

Another larger sale of hazard trees from roadways near those fires should be advertised next week, Spotted Bear District Ranger Deb Mucklow said.

That should amount to 80,000 to 150,000 board feet. The larger salvage sales have yet to be determined. The Forest Service had planned a sale of about 8 million board feet in the Spotted Bear area for next year. Mucklow said about half of that sale burned and the Forest Service now has to determine if it's better sold as a salvage sale.

There could also be timber available from the Marston Fire, Roady noted, but those sales might hinge on whether there's enough road access to get to the wood.