Record high lumber prices in the US, stable income for residual chips, and slightly lower costs for sawlogs moved 2Q 2020 gross margins for US sawmills to some of the highest levels seen since 2005, according to the Wood Resource Quarterly.
Lumber companies in the US Northwest have seen a dramatic shift in their financial health from late 2018 when most sawmills in the region ran at below cash-costs, to the 2Q 2020 when gross margins were at their highest levels in at least 15 years.
Over in Europe, Swedish lumber companies saw slight improvements in profitability in the 2Q 2020 because of increased prices for both domestic and exported lumber and slightly lower sawlog costs. In neighboring Finland, both lumber prices and net wood costs (sawlog costs minus residual income), saw minimal changes in the 2Q 2020, thereby maintaining the current and historically low levels of gross margins. Sawlog prices in both countries have trended downward for about two years.
However, the decline in wood raw-material costs has not kept pace with the declining lumber prices, leading to a significant drop in profitability in 2019 and early 2020. In other countries tracked by the Wood Resource Quarterly, including Austria, Russia, and Brazil, gross margins increased in the 2Q 2020 mainly as a result of sawlog prices declining by 10-20% quarter-over-quarter.
