Russ Taylor

Leading off the Global Softwood Conference was Russ Taylor, Managing Director, FEA Canada, providing a global overview of the supply trends and competitive dynamics of softwood log and lumber markets. Taylor’s focus was the big five markets of Europe, USA, China, Russia and Canada, in that they represent about 80% of the world’s production and consumption of lumber and timber. Key takeaways include FEA’s estimate of a 5% drop in softwood lumber consumption in 2020, followed by their forecast of a 4%-5% rebound in 2021. On the production side, a similar slide and rebound is expected, followed by steady growth thereafter. Global prices, which peaked in mid-2018 and then fell dramatically, have recovered from the subsequent COVID drop and strong pricing is expected to continue. Other speakers will cover these items in more detail.

Supply trends of note include the continued importance of China as a home for surplus volumes of lower grade logs and lumber, currently evidenced by high volumes of European logs and German lumber being being exported to China. Also notable was Central Europe’s spruce beetle infestation, which Taylor said is comparable to BC’s mountain pine beetle epidemic in its potential impact on the competitiveness of European log and lumber exporters in the short term, and in their sawmilling viability longer term.

Finally, Taylor referenced FEA’s benchmarking efforts which explain, amongst other things, how and why BC’s net wood costs became the highest in the world. Most notable was the collective impact of high stumpage costs—which Taylor called dysfunctional relative to prices—during a period of declining timber supply and low lumber prices. Taylor closed by noting that although global trends are always mixed, the BC example demonstrates that when markets are weak, higher-cost suppliers will always be displaced by lower cost suppliers.