Business conditions will be difficult for hardwood sawmills this summer, and many in the industry are predicting a wave of permanent mill closures. However, we expect closures to occur at a relatively low rate.

After having made it this far, the only mills that will close at this point in the business cycle are those that completely run out of money and/or credit. Most will figure out a way to muddle through.

Lumber production won’t explode this summer, but even a marginal increase will oversupply markets. Lumber buyers will have little difficulty procuring adequate supplies of green or kiln-dried lumber—with a few exceptions like Ash and Hard Maple.

Strong Chinese demand has been a “saving grace” for hardwood sawmills during an otherwise difficult time. With Chinese buying down, many mills will hitch their wagons to the railroad tie train, cutting lower-grade logs until demand for #2/better lumber comes back. Most tie treating plants, tie concentration yards and railroads won’t curtail purchases even when they fill up; the outlook for tie demand is relatively good and many buyers are concerned they won’t get enough tie in future months so they’ll take all they can get now.

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