WRQ: B.C. Sawmill Margins Slumped to Hit 15-Year Low

SEATTLE (Scrap Monster): The saw mills in North America reported huge decline in profit margins during Q2 this year, following marginal improvement in Q1 2019. The declining prices of lumber coupled with flat to marginally higher sawlog costs during the quarter contributed to the margin decline, said latest report published by the Wood Resources Quarterly (WRQ).

The B.C region reported lower income from lumber and residual sales. This coupled with marginal changes in sawlog costs sent gross margins of sawmills in the region to nearly the lowest level touched during the times of global financial crisis in 2009.

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According to WRQ, lumber and residual prices have recorded higher growth than sawlog costs in the Nordic countries. This has resulted in increased sawmill profit margins over the past two years. The Q2 ’19 gross margins in Finland and Sweden have surged higher by 4% and 11% respectively, when compared with the corresponding quarter in 2017. The lumber export prices decline in both these countries, WRQ said.

The gross margins in Austria hit the highest level since Q2 ’18, mainly due to substantially lower sawlog costs in the country. Siberian sawmills expanded exports to Chinese market, with export prices remaining almost stable during the past three years. However, upward movement in sawlog costs and ongoing decline in lumber prices affected gross margins of lumber producers since Q4 ’18. The Q2 ’19 sawmill margins in the region dipped below fifteen-year average in U.S. dollar terms.