Softwood surplus dampens prices
A natural disaster in the forests of western Canada coupled with softening demand for new homes in New Hampshire has placed the state’s timber industry at the center of a perfect storm of falling prices, according to one state timber expert.
According to Jasen Stock, executive director of the New Hampshire Timberland Owners Association, excessive beetle kills in the softwood species of western Canada have ignited a large-scale timber salvage in that region – and the results are now being felt in New Hampshire’s timber market.
“Canadian officials want this wood off the stands because of the wildfire danger it poses,” Stock said.
The harvested timber is finding its way to the lumberyards of New Hampshire, Maine and eastern Canada forcing down prices for softwoods – spruce, pine and fir, or SPF.
In addition, imported lumber from places like South America and Australia also are taking a bite out of the U.S. market, Stock said.
All this comes at a time when fewer homes are being built in the state, leaving more of the softwood on the shelves of local lumberyards.
“We are seeing a surplus of the SPF,” said John Feuer of Feuer Lumber, a family owned lumberyard in Atkinson. “We’ve seen a huge effect from the slow housing market. It’s been about 10 months now.”
According to Feuer, a slowdown in demand for certain types of lumber is not unusual, but this year sales have been slower than usual.
Kendall Buck, executive vice president of the New Hampshire Home Builders and Remodelers Association, said March’s permits for new single-family construction in New Hampshire were down 37 percent compared to last year, marking a trend that has continued for nearly two years.
“We’re experiencing a natural cyclical downturn,” said Buck who credits the trend in part to price issues and increasing regulatory barriers as communities deal with growth management issues and the bleak picture of the housing market painted by media.
Despite dampened softwood prices, however, officials remain optimistic about the state’s lumber and housing markets.
“I think you will see a leveling off as the year goes on,” said Buck. “Rates are still good and it’s a good time to buy.”
For Stock, improvements in the efficiency of New Hampshire sawmills that invested in capital improvements while times were good are reason enough to remain optimistic.
According to Stock, the use of new technology at the more than 50 sawmills still operating in the state have allowed for increased lumber production and will allow the industry to meet the demand when the down cycle ends.
“The beauty – or curse – of this industry is that this could turn around quickly,” Stock said. “This is not all gloom and doom. We continue to see a demand for certain hardwoods, and quality always sells whether it’s pine, sugar maple or red oak.”