Western lumber supply favorable

By H.A. Roberts President Western Wood Products Association

I NTO early summer, 1990. the I western lumber industry was haunted by the prospects of log shortages. Demand was strong, but log supplies were down. with few prospects for changing an environ men tallydriven erosion of available timber supplies. A WWPA study at that time showed that, on the average in 1990, mills were expecting to produce 100/o less lumber than they did the year before, almost all because of expected raw materials shortages.

But by midsummer, user markets had softened, along with new orders for lumber. This trend continuing through the fall has resulted in lighter lumber production, which in turn has lessened pressures on log decks. By November, many mills were shortening shifts or cutting back production because of lack of business, not lack of logs. used to replace it. Such renovation is a strong indicator of a healthy market for pressure treated wood.

But the pattern was uneven. Some mills shut down because log supply was dear and stumpage prices high. Others shut down because there was no market. Still others were able to operate at near normal clips. But all were being whipsawed between high raw material costs and low market prices.

On the threshold of 1991, an expected shortage of western lumber caused by tight log supplies alone doesn't look as though it will materialize. Lumber supplies probably will be adequate, at least early in the year. A look ahead at market prospects indicates demand pressure should remain relatively light in comparison to the past three years.

Presently a nationwide lending crunch is underway, complicated by the S&L crisis on one hand and the Gulf crisis on the other. Ultra-conservative lending is suddenly an institutional mandate, while persistent inflationary fears hold interest rates high.

This is evident in the Pacific Northwest, where dimensional lumber for remodeling, decks, and do-ityourself interior and exterior projects has had a very good year. In California, similar sales were offonly slightly from 1989.

This should encourage those of us in the manufacture and supply of treated wood products, despite major challenges to the industry from preservationist tactics calculated to shut down our raw material supply.

Prcssure trcated wood products sales good, improving as 1991 progrcsses. westem housing starts down 7"/o... treated market will continue to grow.

Consequently, WWPA sees U.S. housing starts at 1.2 million units for 1991, 75.50/o single-family. Of total starts, 360,000 units are expected in the West.

The repair/remodel market has two sectors affected by money supply and interest rates. On the contractor side, big-ticket projects requiring financing are expected to ease in numbers during 1991. However, doit-yourself activity may pick up.

All told for 1991, WWPA sees lumber repair/remodel consumption leveling off from the rapid growth it experienced in the 1980s.

Since the forecast necessarily is built mostly on demand expectations, the western lumber industry should hit 19.58 billion board feet if log needs can be met. Until the 1980s, that would have been a banner year in anybody's book.

Lumber supplies a@uate in early 1991 demand lighter than fast 3 years ...1.2 million housing starts. .360,0(X) units inthewest fa'verbQ rcmodeF ing proiects, but cFi-y may pick up the slad<.