Demand for sawdust rises as the board market drops

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Tuesday, April 01, 2008

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STATEWIDE Prices have gone so haywire in the timber industry that Oregon loggers are selling perfectly good Western Hemlock and Douglas Fir logs to be ground into chips for pulp instead of processed into lumber.

“Usually we sell the lowest, cheapest product we’ve got for pulp,” says Randy Hereford, timber manager for Starker Forests in Corvallis.  “Now the board market is so weak that pulp is our best option.”

The precipitous drop in demand for home-building supplies has hit Oregon’s lumber producers hard. Western Oregon log prices fell by 19% between the fourth quarters of 2006 and 2007 and have slid 143% since their peak in 1993 when adjusted for inflation.  The latest casualty was the Weyerhaeuser plant in Junction City, which closed in March.

Meanwhile, the drop in lumber production has decreased the supply of wood chips and sawdust, and prices for those unglamorous commodities have shot up. According to the Wall Street Journal, the price of sawdust has quadrupled in the past two years, from $25 to $100 a ton. That’s bad news for businesses that buy large volumes of wood waste, such as farmers, horse trainers and nurseries. One would think it would be good news for producers of wood residuals, but Bill Putney, of Recycling and Processing Services in Salem, says he loses those gains to higher production and transportation costs from rising fuel prices.

“The money looks nice as it moves from your right hand to your left hand and then out the door,” says Putney, “but it’s just more money circulating. You’re handling more dollars, but you’re not making any more money.”                         

BEN JACKLET


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