Historic downturn slow lumber recovery sets the stage for ,,Nil;,i;l:l:

" "Historic." "Unprecedenred."

These and many other adjectives have been used to describe lumber markets this past year. While the worst may be over, the depth of the downturn in U.S. lumber demand and production has created new challenges and will likely hold back the pace of recovery in the future, according to a lumber market outlook from Western Wood Products Association.

Demand for softwood lumber in 2009 plummeted to the lowest point in more than three decades. The collapse of the housing market, fueled by a U.S. economy roiled by financial crisis, has impacted the lumber business dramati- cally. As demand for lumber evaporated, lumber prices declined, in some cases by 60Vo or more from levels of four years earlier.

Housing long has been a key market for lumber, accounting for 45Vo of annual consumption. After peaking at 2.068 million in 2005, housing starts declined steadily before tumbling in 2009 to post-World War II lows.

Just 55 1,000 houses are expected to be built in 2009, down 39Vo from the previous year, predicts WWPA. That total is the lowest since 1945, when 326,000 homes were built.

As a result, just 7.2 billion bd. ft. of lumber will be used in new construction in 2009, compared to the 27.6 billion bd. ft. used in housingjust four years earlier.

C&D Lumber has been part of Oregon and its communities for decades. Our success hinges on a tradition of commitment to .u the people and stewardship of the forests that make our wqk pdssi ble. From responsi ble forestry to com munity ph i I anthr:rop\4,,,,,,,, we're proud to be here-after all these years.

Overall demand for lumber is expected to total just 31 billion bd. ft. in 2009-less than half of what was used in 2005. That would be the lowest annual volume of lumber used since 1975.

Repair and remodeling uses, the second largest market for lumber, has fared slightly better than home building' but is still weak. An estimated 11 billion bd. ft. of lumber will be used in repair and remodeling in 2009, down26.6Vo from the previous year.

The unprecedented decline in demand has taken its toll on lumber producers. Western lumber production in 2009 is forecast to decrease 2l%o.The 10.2 billion bd. ft. produced by western mills is the lowest since the 1930s and represents a little more than half the volume the same mills produced five years earlier.

Sawmills in the South have reduced production as well, decreasing to I 1.6 billion bd. ft. in 2009. In all, U.S. lumber production will total 21.8 billion bd. ft. for the year, down2l%o from 2008.

Canada and other foreign lumber suppliers have fallen on even harder times in selling to U.S' markets. Lumber imports from Canada are predicted to total 7.9 billion bd. ft. in 2009, a decrease of 32Vo from the previous year.

Other imports, including lumber from Europe and Latin America, should decline by double-digit percentages for the fourth straight year and lose more market share to domestic producers.

Looking ahead to 2010, lumber markets are expected to show some recovery as home construction activity picks up. But given the weak economy, continued high home foreclosure rates, and a financial system struggling for sta- bility, the gains in lumber demand and production will be modest.

WWPA is forecasting lumber demand to rise llVo in

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2010 to 34.5 billion bd. ft. Housing starts will increase 2l%o to 668,000. While that is an improvement, the number of homes built in 2010 will be just half the total of what was constructed in2007.

U.S. lumber production should move higher to meet the slow grow- ing demand. Western mills are expected to produce I I billion bd. ft. of lumber in 2010, up 8Vo. Sawmills in the South will match that srowth and increase production to 12.6 billion bd. ft.

Canada may begin to regain some of the market share lost over the past

Iew years.

Softwood lumber imports from Canada are expecred to riie I 8.8Vo in 2010 to 9.4 billion bd. fr.

Volumes from Europe and Latin America will also increase to iust over I billion bd. ft.

Beyond 20 10, both lumber demand and production are expected to follow an upward trend as economic activity and housing construction continues to rise. Housing starts, though, are not forecast to move above I million units until 2012. Lumber demand will follow those gains, but it may be some time before volumes come close to those recorded in 2005.

As recovery takes hold, hopefully the industry will find more positive adjectives to describe the lumber business.

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Find Sawmills, Products with Online Utility

Historic declines in the western lumber industry have caused many changes in the supply chain, with distributors looking for new sources for lumber and services. An online locator can give wholesalers and retailers a head start on finding new lumber suppliers.

Available at www.wwpa.org, the Online Lumber Buyers Guide can be used to generate a list of western mills based on species, product, service, even transportation mode. Once the criteria is selected, mill listings can be generated showing the sales contacts, phone and email addresses.

Product selections range from dimension lumber to boards to specialty products such as fingerjointed lumber or pattern stock. All major western species can be sourced, including Douglas fir-larch, white fir, and ponderosa pine.

Retailers selling product to green building projects can use the guide to find western mills making FSC or SFI certified lumber. Mills cutting for export markets can also be identified.

Product services that can be selected range from heat treated (HT) stock, end waxing, double end stamping and long lengths. Transportation selections cover the major railroads-direct and reloadas well as truck or barge.