An additional 15 sawmills will close across the U.S. South in 2009, removing 750 million board feet of lumber production from the market, according to Forest2Market trend data. This reduction represents a 7 percent decline over 2008.
Mills most likely to close purchase under 350,000 tons of small diameter sawtimber per year and produce small-dimension lumber, such as 2x4 studs. Because demand for their product mirrors housing start numbers, these mills are particularly vulnerable.
“Raw material costs represent 70 percent of a mill’s total costs,” said Daniel Stuber, who oversees analytics and data quality at Forest2Market. “In the current market, the price floor for small logs is approaching pulpwood prices. As a result, small log mills can’t continue to cut their raw material costs. Nor can they adjust their product offerings to meet market needs for wider-dimension lumber.”
Sawtimber prices will also continue to drop in 2009. Forest2Market estimates the year-over-year drop from 2008 to 2009 will be in the single digits, perhaps as low as 3 percent.
Forest2Market data shows the 2009 trend will moderate significantly over the 2007-2008 trend line. Sawmill production in 2008 fell 23 percent from 2007’s level. Sawtimber prices in 2008 fell nearly 10 percent from 2007’s prices.
“With a production decline of 7 percent and a price decline of 3 percent in 2009, it looks like the industry has accomplished the necessary work of right-sizing output,” said Stuber. “ What this means is that if sawmills can manage their costs and make it through 2009, chances are good they will survive the recession.” Forest2Market’s timber price forecast models show that the housing market will begin to turn the corner in the first half of 2010.
Forest2Market Is Hiring
May 07, 2013;
Forest2Market is currently hiring. Check out our job listings.
Forest2Market Issues First Delivered Wood Fiber Price Benchmark for the Midwest, Reports Prices for 4Q2012
February 20, 2013;
First transaction-based wood fiber price report for the Midwest, Forest2Market Delivered Price Benchmark, brings transparency to the market. Fourth quarter 2012 total fiber prices for aspen, softwood and hardwood reported.
Forest2Market Has Moved
January 26, 2013;
In order to accomodate its growing staff, Forest2Market has relocated its headquarters. Still in the Ballantyne Corporate Park, Forest2Market's new address is:
15720 John J Delaney Drive, Suite 550
Charlotte, NC 28277
Our phone numbers remain the same.