Issue link: http://palletcentral.uberflip.com/i/1115386
36 PalletCentral • March-April 2019 palletcentral.com Canadian softwood lumber that were instituted in 2017 and a shortage in log supply in British Columbia (BC) due to mandated reductions to its annual allowable cut (AAC). U.S. South lumber prices vs. log prices – Residual market changes The 2008 recession had a devastating effect on sawmill production in the U.S. South. Thirty-six southern yellow pine mills were closed, and capacity was reduced by 30%. Consequently, nearly 4 million tons of residual chip supply evaporated from the market between 2007 and 2009. With improved new housing and remodeling demand, however, lumber and chip production recovered by 2015 and even surpassed 2007 levels in the following 2 years—making a slow but full recovery. Prices for residual chips have increased modestly over the past 10 years; as pine residual chip supply increased, both delivered and FOB chip price (the price that sawmills get paid, excluding freight) also increased. The increase has been modest, however, below the rate of general inflation. Residual chip supply delivered to consumer – U.S. South: Pine Species Based on any measure of manufacturing output, the U.S. South solid wood (lumber and panels) and softwood pulp markets have returned and surpassed pre-recession levels. Their cost structure ranges from globally competitive (pulp) to the envy of the world (lumber). New capital investment is pouring in from around the globe, and profitability is at record highs. Where demand for softwood lumber has returned, so has supply of residuals in the form of chips, sawdust, shavings and wood fuel. Conversely, where solid wood demand has not returned (particularly for hardwood lumber), residual supply has followed suit. The softwood/pine wood residual market has been soft, but stable for some time. With expanding southern lumber MARKETS