North America Sawmill Margins Drop To 15 Year Low

According to AJOT, sawmill profit margins have fallen substantially in North America over the past 12 months with BC sawmills margins in the 2Q/19 being close to their lowest levels in 15 years, reports the Wood Resource Quarterly.

 

Costs for sawlogs declined in most major regions around the world in the first half of 2019. However, lumber prices have fallen faster in key markets resulting in lower profits for sawmills, particularly in British Columbia, the US South and Eastern Russia, according to the Wood Resource Quarterly.

Seattle, USA. Lower lumber prices and only small adjustments in sawlog costs in the 2Q/19, sawmills in North America saw their profit margins decline again after a short-lived improvement in the 1Q/19. Although margins have fallen quite substantially in the US South the past year, reaching a three-year low, they are still higher than the 15-year average as tracked by the WRQ.

Small changes in log costs together with lower income from lumber and residual sales have taken the gross margins for sawmills in British Columbia down to their lowest levels since the Global Financial Crisis back in 2009. In the 2Q/19, these margins are less than half of their ten-year average.

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