This week’s Hardwood Market Report highlights record low production levels for Eastern hardwoods 

In today’s global economy, supply chain security for critical raw materials like lumber is under unprecedented strain. Historically, consumers and businesses benefited from stable pricing, predictable inflation, and efficient logistics, allowing products to arrive on time. This was often without thinking about the intricate supply networks buttressing manufacturers worldwide.  However, geopolitical issues, energy costs, supply-demand imbalances driven by mill closures due to a lack of profitability, and environmental factors have signaled the potential for huge price swings should consumer spending improve.

The February 14th Hardwood Market Report noted that “Eastern US hardwood sawmill production fell below four billion board feet (BBF) for the first time in the 65-plus years the HMR has tracked production.”  They also noted that, when referring to Southern mill production, “Mill output declined 12.3% from the December rate in the Southern region, which was more than the other two producing regions.”  In 1985, the Weekly Hardwood Review did an expansive North American hardwood lumber production study that involved thousands of data points and concluded that North American hardwood production exceeded 13 billion board feet.  Using this as a baseline, the North American hardwood production level is down 70% over the last 40 years.  While one might infer from this that there is a significant turn-up capacity should demand improve, the economics of logging and sawmilling combined with the capital costs of restarting shuttered operations or building new ones are so large that the industry is probably limited in its ability to respond. 

Any lumber shortage remains an issue for the home construction industry, particularly in North America. In 2023, lumber prices rose by 30%, as reported by the National Association of Home Builders, which fueled an unprecedented increase in home prices. Yet we continue to hear about housing shortages and the need to build new housing in the US.  However, with home affordability at record lows and mortgage rates stuck around 7%, any dramatic increase in the current market for softwood products that go to build a home, or the hardwood products that finish and furnish one, could kill a market currently precarious at best. 

So, where does Alder fit in the picture of reduced production and limited turn-up capacity? The picture is better for those who rely on Cascade for consistent volumes. We have good log decks and are running mandatory overtime at the Chehalis and Port Angeles sawmills. Logs are available, and pricing is relatively stable. We are seeing spot shortages in some items and have increased some prices to reflect the ever-increasing cost of producing lumber.  With prices down significantly from where they need to be from an overall profitability standpoint, we do see moderate Alder price increases on the horizon.  Despite some anticipated price increases, distributors and manufacturers who rely on Alder should find their supply chain in solid shape.  In addition, we do have the capacity to take on some new business, especially in the cutting grades like Com2, Custom Shop and Cabinet Plus, as well as PC Maple.  Buyers who see their demand increasing need to step up now and get the product on order, as we do see where these Eastern hardwood shortages will drive some to use more Alder in their production.