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Meanwhile ... back to the real world. Lumber prices soar.

edited August 2020 in Off-Topic
To balance out Jerome Powell’s struggle to boost inflation to 2% (see other post) I uncovered this reference to the world most of us actually reside in.

Excerpt:

According to Random Length’s weekly report on North American forest products markets, the price of framing lumber topped $800 p/bdft last week. That’s a 130% increase since mid-April . The price last year was just $350 p/dbft. “According to my suppliers, we’ve seen a two almost two and a half times of cost increase,” Jeff Checko said, broker with The Ashton Real Estate Group. “You’re going to see impact in the delivered asking prices from builders and quoted pricing for custom homes and home renovation projects.”

The recent spike is causing the price of an average new single-family home to increase by $16,000 since late April, according to the National Association of Home Builders.“These builders that have these houses for $350,000-$550,000 – now instead of paying $30,000-$40,000 for their framing package – they’re spending $75,000-$90,000 for their framing package.

https://www.wkrn.com/news/the-price-of-lumber-soars-to-unprecedented-level/

Comments

  • I guess this is what happens when you're deemed a non-essential industry.
  • Wood products declared essential industry by US government (March 20th story)
    https://kpic.com/news/local/wood-products-declared-essential-industry-by-us-government

    A significant part of the problem is on the demand side, as reported in the story hank cited. “[People] are at home bored. They’re going to build an addition; fix something on their house; build a dec; redo this; or redo that,”

    Yes, there's a decline in lumber mill production. A real shortage could have been readily addressed by a national policy prioritizing essential uses over adding residential decks.

    As to the rising price of lumber itself, it is important to note that the story refers to framing lumber. Please correct me if I'm wrong, but that appears to be softwood or engineered wood.

    So we're not talking about all lumber prices, just some materials. Hardwood prices have been dropping over the past year. (In the graph below, the labels apply to the matching color lines, not to the lines they appear to be pointing to, e.g. the CPI line is the gently sloped black line in the middle.)
    image

    https://yieldpro.com/2020/08/construction-material-prices-rise-on-higher-lumber-prices-2/
    Softwood lumber prices rose strongly again in July. Soft plywood product prices also jumped this month. Reports indicate that the price increases are due to lumber mills being shut down due to COVID concerns and not ramping production back up quickly enough to accommodate the increased demand caused by the resumption in construction activity. Reports that prices for raw timber have not increased support this view. If true, then the price increases currently being experienced may prove to be only temporary.
  • edited August 2020
    @msf - great chart. If I’m reading the chart right, softwood prices are highly seasonal - which explains some of the recent spike. And hardwood prices are trending down - with fewer folks out furniture shopping. Here’s a blurb which sorta explains the difference between hardwood and softwood.

    Extended Excerpt:

    “Ever wonder what the difference is between softwoods and hardwoods? Contrary to their name, softwoods aren’t weaker than hardwoods. They do tend to grow quicker than hardwoods, and because of that, they are less dense. Softwood comes from coniferous trees (trees that keep their needles all year long). Some common types of softwoods are pines, spruces, cedars, and firs. These woods are also usually lighter colors.

    Hardwoods, on the other hand, grow slower and produce a much denser wood, which is also heavier than softwoods. Hardwoods come from deciduous trees (trees that drop their leaves each year). Some commonly used types of hardwoods include walnut, maple, cherry, ash, and birch. Woodworkers tend to love working with hardwoods because of the wide variety of colors as well as the grain patterns and textures that make for beautiful and creative wooden furniture. These woods tend to have darker colors than softwoods.

    Generally, in relation to furniture manufacturing, hardwoods are the better choice, because of their more dense structure. Not all hardwoods are equal; some are much denser than others, making them better suited to different applications. For example, hard maple is extremely hard, (hence the name!) and is often chosen for uses like flooring, because it can withstand the pressures it will undergo. Hard maple is nearly indestructible when it comes to everyday wear and tear, in comparison to something like pine, which would really take a beating.”
    Source

    I also tried to find the relative volumes sold for hardwood vrs softwood but couldn’t. From experience I know that hardwood is great for furniture and applications where the wood is visible (ie a countertop) because it is usually prettier and stands up to wear better. Softwood is generally used for construction. One exception is the softwood, cedar, which is not only beautiful, but tends to resist rot and insects, hence used often in “cedar chests.” Decking is often cedar or a softwood like pine that’s been “pressure treated” with a rot-retardant chemical. As far as I know, that type of wood is not allowed for interior use due to potentially toxic vapors. As for firewood, hardwoods are far superior. Wood “density” is roughly proportional to heat content.

    Only the most expensive furniture today is 100% hardwood. More often what you’ll buy or see is furniture constructed of softwood or a “wood product” covered with a thin layer of hardwood “veneer“ for outer appearance. The process involves turning an unprocessed hardwood log on a lathe, stripping the veneer in thin layers until the log is no longer usable. The remaining (perfectly round) logs are sometimes sold to enthusiastic homeowners for winter heat. These “cores” are prized (and more expensive) for their hardwood content, cleanliness, and generally high heat value. Once the bark has been stripped these “season” rather quickly, another feature of ready-to-burn firewood. By chance I happened upon a couple small loads of nice pole wood this summer - maybe 8-10 “face cords” in all. They will help keep the home toasty in January, February, March when the wind blows off ice-covered Lake Michigan.

    The photo shows a large stash of pole wood. These have been run on a lathe and stripped of bark and outer layer of veneer. Notice how clean and perfectly round they appear.

    image
  • @msf who posted:
    "Wood products declared essential industry by US government (March 20th story)
    https://kpic.com/news/local/wood-products-declared-essential-industry-by-us-government

    They might have said it but the follow through was iffy at best according to several of my industry contacts. First, the declaration by Homeland Security was an advisory order at best. See: Essential Workers

    Second, as the industry link you posted noted states and jurisdictions were free to classify what was essential or not and/or what might be included or not in the listing: ""Consequently, Roseburg’s Weed, Calif., veneer facility will continue to operate as part of our efforts to supply critical building products during the COVID-19 pandemic," RFP officials said. "Other states and other jurisdictions may develop their own lists of essential industries and workers who would be excluded from broad 'shelter in place' or similar quarantine orders.""

    Those contacts I mentioned said that many of the plants were either shutdown or running at reduced capacity often because the loggers were sitting it out.
  • "Other states and other jurisdictions may develop their own lists of essential industries and workers who would be excluded from broad 'shelter in place' or similar quarantine orders."

    Exactly - one cannot say that on a national level any industry was declared essential or non-essential. Rather it was a state-by-state classification. However, it is worth noting that twenty states adopted the CISA guidelines intact.

    Which raises the question of what you meant by saying that the construction industry was "deemed a non-essential industry". Deemed by whom? Certainly not all fifty states.
    For the 20 states deferring to CISA’s guidelines, a wide range of trades are considered essential, Including those supporting the construction, maintenance or rehabilitation of several sectors, from energy to public works and infrastructure to communications. Many of the states that have developed their own guidelines use similarly broad language to encompass as many of these professionals as possible.
    https://www.ncsl.org/research/labor-and-employment/covid-19-essential-workers-in-the-states.aspx

    Here's a page that may be helpful, as it focuses specifically on the construction industry. It describes, state by state, what construction activities were considered essential, and in which parts of the states. It also includes links to the actual state orders between March and May.
    https://www.jlconline.com/coronavirus-construction-limits-state-by-state-tracker

    I don't doubt that "often ... the loggers were sitting it out." The question is why? Because they were not allowed to work ("deemed non-essential"), or because of their own health concerns, or for some other reasons?
  • 'Deemed' was probably a bad word choice, however when I asked where the bottlenecks were most folks stated that the companies told their work force that they were 'deemed' non-essential. Construction was allowed albeit with smaller crews, building material suppliers were conducting business with limited supplies. The shortages just seem to work backwards from from the wholesale and retail outlets. You're right, the question is why. Lastly, I did not gather information or responses from all 50 states.
  • edited August 2020
    msf said:

    I don't doubt that "often ... the loggers were sitting it out." The question is why? Because they were not allowed to work ("deemed non-essential"), or because of their own health concerns, or for some other reasons?

    I don’t know much on this. But doubt loggers are going to log if they can’t ship / sell to the mills that process the logs. Timber goes from tree to transport truck to mill in a matter of days as I understand it. The mills need to keep running in order to accept new loads of timber. Picture the logs coming off the trucks and being fed into the mill by mechanical means that same day or the next. At the other end of the mill out come the processed wood products which are loaded onto the trucks (or trains) within a day or two and shipped to the wholesalers. It’s a continuous unbroken chain. Since the mills were understaffed or completely shut down, there was nowhere to take the logs. Probably better to leave the trees standing. Unprocessed logs can deteriorate fairly rapidly. (impressions based on having spent quite a bit of time at an area saw mill).

    Why didn’t enough workers report to the mills? Don’t know.

  • You're describing a "just in time" industry. This is something I was wondering about.

    There are some industries that function that way. Think toilet paper. No inventory is kept because this is a product that takes up a lot of space relative to its value. Too costly for manufacturers to stock up in order to buffer fluctuations in demand.

    On the other end of the spectrum, we have the Max 737. How many did Boeing stash in warehouses or wherever they keep them?

    You write that there is nowhere to take the logs. The implication is that, like toilet paper (which coincidentally also comes from logs), there's little to no storage area for logs - neither where they are cut down nor at the mills to which they're delivered.
  • edited August 2020
    The mill where I’ve hung out (waiting to have my pickup loaded with scrap firewood) certainly looks like a “just in time” operation. There’s always big double-trailer logging rigs unloading, arriving, and leaving. It’s a bit unnerving to be in the vicinity of so much gross tonnage being moved about by heavy equipment in rather tight quarters. An on-site manager accepts deliveries and writes checks to the drivers. There’s not much room to store logs. They pretty much are processed the same or next day.

    Of course, the mill is very noisy with many saws and finishing machines running all at once. Various finished wood products are sorted, stacked and stored indoors or outdoors to await pickup. Everything from construction lumber to railroad ties. Nothing goes to waste. Sawdust is picked up by area farmers for animal bedding. I don’t know what type wood goes into paper products. They are not produced at the mill, but quite likely the mill supplies pulp to another area facility that makes paper products, including Charmin tissue. That local company made local newscasts when the TP crisis struck. According to them , they had plenty of TP in their area warehouse. Just couldn’t get it to the stores fast enough to keep up with customers clearing off the store shelves. At one point, they were inviting people to drive in and buy from the warehouse.

    PS - I’ve read since originally posting that after being cut, sometimes the logs are stored on site for brief periods before being loaded on trucks. Seriously, I doubt it’s for long. Probably has to do with proximity to proper loading equipment. BTW - Stay clear of those rigs on the roads. Loads have been known to break loose and crush nearby autos.

    Re 737 - Storing aircraft for prolonged periods is an expensive proposition. Engines (and other components) need to be specially prepared for long term storage.
    .
  • From Cullen Roche at SeekingAlpha FWIW. It doesn't really address the why.

    Lumbering Along
  • I'm starting with no knowledge of the lumber industry, and am just picking things up as I go along.

    It seems fair to say that uncertainty created by the pandemic is adversely affecting many industries, including this one. It's just that the "how" is complicated.
    The mills, a lot of them shut down for a while in the spring and shut down in anticipation of there not being any demand this year. Consequently, they got behind the eight-ball. They didn’t keep producing and all of a sudden states, like New York for instance, said that building supply stores were an essential business and had to remain open and should remain open. They have never looked back and we’ve never caught up in the supply chain.”

    During normal times, mills are able to follow seasonal changes in demand and adjust accordingly. The twin-pronged problems with both staffing and demand that have been caused by COVID-19 are unprecedented.
    https://www.observertoday.com/news/page-one/2020/08/some-supplies-in-high-demand-due-to-coronavirus-pandemic/

    [NY's original essential business order, on March 20th, declared building materials retail stores essential businesses. As did NJ's original March 21st order. As did Conn.'s original March 22 order. The mills guessed wrong here.]
    https://www.nbcnewyork.com/news/business/what-businesses-are-considered-essential-under-ny-workforce-reduction-order/2336886/

    That's not to say that some construction wasn't curtailed. We had roof repairs done at the peak of the pandemic locally, but we would have been crazy to have pushed through our scheduled bathroom renovation at the time. Not that we would have been permitted to do so had we wanted to.

    While hank's local mill keeps few if any logs stored, that's something else that seems to vary from place to place. Back in April, the LA Times wrote:
    California has declared the timber industry, like farming and municipal waterworks, an essential business during the COVID-19 outbreak. Although construction is down and several sawmills are shuttered, loggers continue felling trees.
    image
    In Scotia, 50 miles south on Highway 101, tens of thousands of tree trunks are neatly stacked in empty lots near Humboldt Redwood Co,’s sawmill.
    https://www.latimes.com/california/story/2020-04-16/tree-sitters-protest-logging-as-a-virus-lays-waste-to-the-timber-industry
  • edited August 2020
    Those logs are redwood, which I'm guessing may tolerate storage better than other softwoods such as fir or pine. I notice a water tanker there also... spraying water on felled logs is frequently used to keep them in decent condition. Perhaps the truck is used for that purpose.
  • edited August 2020
    The mill I’m familiar with is pretty much a family operation (2 or 3 related families). I’ve seen log piles on-site like in msf’s photo there, but you’d be surprised how fast those get fed into the mill. Likely about 1 every minute or so non-stop, for as long as they run. On a 10-hour day, for example, they would process 300 or more logs. The logs visible in photo might last a couple days. Logs are raised from the ground and swung into position by a large crane. They start out at the highest part of the structure and apparently work their way down to ground level where the finished product exits. (A nod to Newton)

    I visited a discussion board sponsored by Forestry Forum while trying to verify my and Old Joe’s comments. Here’s what one dude said about how long logs could be stored without processing:

    “Any hardwood especially during warm humid weather needs to be sawn, stickered and placed in a kiln within days of being logged. White Pine will turn blue and the bugs will feast.”

    Here’s another’s take on the question:

    “ I agree with Arkansawyer that logs can be held for very long times (years) if up off of ground... Exception is solfwoods and Pine especialy... ”

    There seemed to be divergent opinions. Seems that pine is the worst for deteriorating. I frequently store firewood on cement slabs outdoors. It’s hardwood - most often red oak and ash. It really deteriorates over 6-12 months when exposed to the weather as it is. Moisture gets under the bark and the bugs love moisture. Crickets, beetles, worms. Fire-ants are the worst. They bite.:) Covered indoors and kept dry it would last much longer - almost indefinitely.*

    PS - Some varieties will “season on the stump.” That was the case with red elm which was wiped out by a disease 30-40 years back in this area. Unique to that tree, the bark would drop off naturally soon after the tree died. And upright, the standing trees could be harvested for excellent firewood years into the future.

    *EDIT- I should mention that, unlike those logs in msf’s photo, firewood has been split open and cut to 16” lengths. That’s why it will keep near indefinitely indoors. But whole logs like those pictured, without being cracked open and covered in bark, are candidates for quick rot.
  • @Old_Joe: Are you sure that's not a honey wagon ? LOL
    Enjoy your weekend, Derf
  • @Derf- yeah, I wondered that myself. :)
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