Sawmill profits fall as pine prices decline
Elliott Sawmill.

SEATTLE  -- Lumber prices in North America continued their decline from the third quarter of 2018 with substantial reductions reported. Average lumber prices for southern yellow pine were down 12 percent quarter-over-quarter in the third quarter, which was then followed by a reduction of 17 percent in the fourth quarter, according to the quarterly publication Wood Resource Quarterly.

With practically no change in log or chip prices, gross margins, and EBIDTAs have fallen in the Southern states, after having reached a 13-year high in the second quarter of 2018, as reported in the latest issue of the WRQ.

However, the region’s sawmill margins were still well above their 10-year average margin. With lumber prices continuing to decline faster than log prices, profit margins have continued to slide in early 2019.

Sawmills in British Columbia have also seen the prices for lumber in the U.S. market come down substantially during the second half of 2018. Despite the weaker lumber market, sawlog prices still increased in late 2018 because of tighter supply and a rise in hauling costs. Sawmills saw their gross margins plunge to unprofitable levels and many companies decided to take market-related downtime in late 2018 and early 2019.
Sawmills in Siberia continue to expand exports to China with fairly stable lumber export prices the past three years. However, in the fourth quarter of 2018, lumber prices fell to their lowest level in almost two years. This occurred at the same time as sawlog costs remained unchanged from the previous quarter, resulting in reduced gross margins for many lumber producers at the end of 2018. See


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Karl Forth

Karl D. Forth is online editor for CCI Media. He also writes news and feature stories in FDMC Magazine, in addition to newsletters and custom publishing projects. He is also involved in event organization, and compiles the annual FDM 300 list of industry leaders. He can be reached at [email protected].