Kevin Mason
We came into 2024 with high hopes: The COVID pandemic and its aftereffects were finally confined to the rearview mirror; energy shocks following Russia’s invasion of Ukraine were behind us; Fed rate cuts were seemingly imminent; and, after a year of “hurry up and wait,” the next U.S. housing up-cycle would commence. How things have changed! Expectations around Fed rate cuts have shifted dramatically in recent months, reflecting myriad negative macroeconomic developments. …If we enter a period of stagflation, wood products producers would be one of the more obvious losers in the Forest Products sector. Elevated interest rates stymie housing demand, negatively impacting consumption. Timber REITS will also remain out of favour with investors in a higher-interest-rate environment, while sluggish demand for housing/lumber/panels will hit timber demand. For pulp producers, challenging economic conditions in China are a bigger near-term risk, but stagflation would hurt demand for all pulp end users.
It’s been a dire month for North American lumber markets, and, as has been the trend year-to-date, Southern Yellow Pine (SYP) continues to underperform S-P-F. SYP 2×4 prices slumped to $285 last week, their lowest level since November 2011. We suspect that even in the low-cost U.S. South, many sawmills are losing money at these prices. …For S-P-F, 2×4 prices are now in freefall after holding up relatively well through the first three months of the year. Prices have declined by $81 in the past four weeks and are trading at just $382 today. Prior sawmill downtime announcements, coupled with steady demand from new residential construction, supported S-P-F prices through Q1; however, this supply/demand balance has changed in recent weeks. …The incredible run in OSB appears to be over; prices in all major producing regions posted significant ($20–40) declines last week. …Despite not experiencing the same pricing uplift as OSB over the past several months—plywood pricing has been steady, if unspectacular—plywood prices are also moving lower, and the rate of decline accelerated markedly last week.
VANCOUVER, BC – After thorough analysis of the persistent shortage of economically available timber and challenging operating conditions in northern BC, Canfor Corporation announced the permanent closure of its Polar sawmill in Bear Lake, BC and the suspension of its planned reinvestment in Houston, BC. This follows the announcement by our subsidiary company, Canfor Pulp, that one line of production will be indefinitely curtailed at the Northwood Pulp Mill. The Polar sawmill has been curtailed since January 2024. The permanent closure will impact approximately 180 employees. CEO Don Kayne said, “The ability to reliably access enough economic timber to run our manufacturing facilities is critical for our business. Unfortunately, while our province has a sufficient supply of timber available… the actual harvest level has declined dramatically in recent years. While this decline is partly the result of natural disturbances it is also the result of the cumulative impact of policy changes and increased regulatory complexity. 
NEW YORK — Brazilian pulp and paper company Suzano has approached US-based International Paper (IP) to express interest in an all-cash acquisition that would be worth almost $15 billion. The approach comes less than a month after IP agreed to buy British packaging firm DS Smith for $7.2 billion, beating out a rival bid from London-listed Mondi. …Suzano has communicated its $42-per-share offer to IP’s board of directors verbally, and could submit a formal bid in the coming days. IP is poised to reject Suzano’s offer as inadequate. Suzano said that it has neither signed any agreement with IP for a potential business combination nor has any decision been made by the company’s management in respect to a potential deal. Suzano, the world’s largest pulp manufacturer has informed IP that the offer would be conditional on the latter abandoning its deal with DS Smith, the sources said.
PORT ANGELES, Washington — The Olympic Peninsula’s legislative delegation discussed priorities for next year. …An issue raised with lawmakers was the forestry industry with some attendees expressing concern about more state Department of Natural Resources’ timberlands being moved into conservation status. Revenue from state timberlands funds junior taxing districts and local education, and the local timber industry provides a number of well-paying jobs. Lawmakers said they were concerned about the health of the timber industry and said finding a balance between a robust industry and environmental stewardship is difficult. …“My view is that if we could take those trees and turn them into mass timber products and build buildings with those trees, that will sequester that carbon,” Tharinger said. …Van De Wege said. “I’m very concerned about taking more land offline. …I worry about a collapse where sawmills are going out of business.”
BURNABY, BC — Interfor Corporation recorded a net loss in Q1’24 of $72.9 million compared to a net loss of $169.0 million and a net loss of $41.3 million in Q1’23. Adjusted EBITDA was a loss of $22.3 million on sales of $813.2 million in Q1’24 versus a loss of $51.4 million on sales of $785.9 million in Q4’23 and Adjusted EBITDA of $26.1 million on sales of $829.9 million in Q1’23. Notable items include: due to ongoing weak lumber markets… Interfor announced plans to reduce its lumber proaction by 175 million board feet, representing just under 10% of its normal operating stance. Although North American lumber markets over the near term are expected to remain depressed as the economy continues to adjust to inflationary pressures… Interfor expects that over the mid-term, lumber markets will continue to benefit from favourable underlying supply and demand fundamentals. 
.jpg)
The Washington State Department of Natural Resources released its annual Forest Health Highlights report on Wednesday following a 2023 aerial detection survey that mapped 517,000 acres of forests with some level of tree mortality, defoliation, or foliar diseases. …Though the 2023 Forest Health Highlights report documents the fewest acres affected as part of a complete survey since 2018, it also contains several concerning trends and new data points underscoring the forest health crisis in Washington. One of the most concerning datapoints comes courtesy of the Douglas-fir engraver. Scientists mapped 25,600 acres of tree damage attributed to this bark beetle – the largest amount recorded by an aerial survey in Washington since 1969 and nearly 20 percent more than the 20,300 acres observed in 2019. Douglas-fir engraver damage signatures such as dead tops and branch flagging…
Land management in the United States will need a paradigm shift to survive climate change and a legacy of mismanagement. A team experts from four tribes, 10 universities, the Forest Service and a handful of environmental firms across North America are calling for a “two-eyed seeing” approach to land management. This means genuine collaboration between Indigenous and Western governments. The policy recommendations were outlined in a report released April 10. The report was co-led by Oregon State University professors Cristina Eisenberg and Michael Paul Nelson, and fire ecologists Susan Prichard of the University of Washington and Paul Hessburg of the U.S. Forest Service’s Pacific Northwest Research Station. Forest management in the United States is at a crucial juncture, and agencies such as the Forest Service are more open to integrating Indigenous knowledge and practices of land stewardship. …In the Pacific Northwest, two-eyed seeing in part addresses misconceptions about fire and conservation. 
Fewer Americans today see climate change as a “very serious” problem than they did three years ago, according to a survey released Monday. The Monmouth University poll shows a 10-point decline in Americans who says climate change is a “very serious” problem, falling from 56% in September. The decline was less steep overall – with 66% ascribing climate change as a problem that’s either “very serious” or “somewhat serious.” That’s down from 2021, when 70% of respondents described the climate change problem as either “very serious” or “somewhat serious.” Patrick Murray, director of the Polling Institute, attributed this trend to a decline in urgency among Americans. “Most Americans continue to believe climate change is real. The difference in these latest poll results is a decline in a sense of urgency around this issue,” Murray said. The decline in urgency can be seen most acutely among young people.
DULUTH TOWNSHIP, Minnesota — By the 1880′s the 19th century lumber barons had clearcut their way from Maine to the Northland. Tom’s Logging Camp on Highway 61 is part tourist trap and tribute to the Swedish, Norwegian, and Finnish immigrants who filled the real logging camps of the past century. …A tour of Tom’s Logging Camp starts with a stop at horseshoeing stall. Everything in camp was either people or horse-powered. If the ground was soft, the horses leased for the winter from local farmers wore bog shoes. …After a long day in the cold woods, the loggers found rest in the bunkhouse where rookies got stuck with the bottom bunk. “They got the bottom bunk because it was not warm enough but the bedbugs would fall on you from the top bunk,” said Bill. Top dog in camp at the top of the pay scale was the head cook. He got 60 dollars a month.