Pacific Northwest Log Prices - March 2010

Lumber and plywood price increases in January and February led Westside mill buyers to escalate prices. Taking advantage of these higher product price levels, mills with low log inventories have been securing logs for “real time” production. Competition for logs purchased by exporters have cut deeply into domestic supplies as China and Korea sorts now include many common quality logs historically destined for domestic building products.

Weather—specifically the early break-up during January—slowed inland Eastside logging production to a standstill. Most logs were already delivered and in the deck before the recent spike in lumber prices. Log exports of any consequence are absent in this area. Though mill closures and consolidations in the inland region have been considerable, available timber supply is still close to demand by existing mill capacity. If the present trend continues, inland log prices will rise when logging production resumes in early April.

While it’s refreshing to see higher product prices, housing is projected to continue it’s sluggish pace as very slow sales are reported. Shortage of wood throughout the supply chain spurred recent price increases as buyers look to replenish low inventories. Current demand is very shallow, however, and may be easily swamped by adding significant production.