Seven predictions for the 2017 wood products market

We are in a glass half full market at the moment and it has given little optimism for the rest of the year.

By Tyler Freres

For the Capital Press

Published on March 16, 2017 11:10AM

Tyler Freres

Tyler Freres


The first quarter of 2017 has surprised the wood products industry already; after a year where log prices increased dramatically and finished wood product prices remained subdued at best.

Good markets and bad markets can be distinguished by very slight marginal shifts in supply. We are in a glass half full market at the moment and it has given little optimism for the rest of the year.

• Substantial increase in demand: Housing starts are projected to be up 11 percent in 2017 and by another 11 percent in 2018. Wood products producers rarely take third-party forecasts as gospel, but, if true, there should be a substantial increase in demand in 2017. Increased industrial and commercial uses for veneer-based panels, as well as substitution of plywood for oriented strand board (OSB), could lead to much brighter plywood panel markets this year.

• Decreased panel supply: A major provider in the Pacific Northwest wood products market closed early this year. OMAK Forest Products recently shut down all operations, which has taken a significant producer of sheathing and panels off the market.

• Market turbulence with trade: The Canada-U.S. softwood lumber dispute, one of the largest and most enduring trade disputes between both nations, enters unknowns after the Softwood Lumber Agreement expired in 2015. With a new administration in the White House, there is buzz about potential import tariffs, which could increase uncertainty in wood products markets and affect the volume of panels entering the U.S.

• Wood product commodities challenged: U.S. commodity wood products will continue to be adversely affected by increased imports due to the strong U.S. dollar, but will North American demand be enough to overcome downward price pressure? U.S. companies have tried to compete head-to-head against cheap imports but it has proven too painful. I think we will see additional product development in 2017 as U.S. companies try to realize the highest value out of expensive resources.

• Conflict over resources: Oregon’s Elliott Forest debate is an indication of potential future conflicts regarding the responsible use of our nation’s resources. While Gov. Kate Brown’s plan called for assuming more state debt to buy part of the forest, would issuing $100 million in bonds really solve the problem? The State Land Board just ruled 2-1 to proceed with the sale for $220 million, because the state has a legal responsibility to generate revenue for the state’s school children.

Linn County is pursuing a class-action lawsuit against the state of Oregon alleging breach of contract for failing to maximize the long-term benefit to timber counties. They estimate that the value of foregone timber harvest is around $1.4 billion. Can the state afford to pay the counties back for the lost revenue resulting from lack of timber harvests?

• Restrictive legislation hampers Oregon manufacturers: Manufacturers have suffered greatly at the hands of the Oregon legislature. Minimum wage and paid sick leave have left employers scrambling to put in place policies that meet the letter and spirit of the laws while also trying to maintain a manufacturing environment.

Predictive scheduling, under the guise of providing predictability, will rob employers and employees of opportunity for overtime and the flexibility to compete during the rigors of an unpredictable marketplace. New overtime rules limit opportunity for our employees to earn a higher paycheck, and limit the company’s ability to compete globally.

• Promising opportunities with mass timber: Mass Timber Construction has the potential to revitalize the wood products industry. Freres Lumber is excited to be part of this promising movement by developing its own proprietary mass timber panel, the Mass Plywood Panel, or MPP. By the end of 2017, we intend to have a new production facility completed that can produce veneer-based panels 12 feet wide by 48 feet long by up to 24 inches thick. There is not a producer in the world that can produce a panel like what we are envisioning. We have high hopes that we have developed an advanced engineered wood product that can compete globally and realize the full potential of our local renewable resources.

Tyler Freres is vice president of sales for Freres Lumber Co., with plants in Lyons and Mill City, Ore. Visit www.frereslumber.com or call 503-859-2121.



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