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Birch shortage. Domino effect in a difficult economy


Hugues Paulin

Director procurement and new product development

Columbia Forest Products




One of the biggest challenges the industry of hardwood plywood and veneer is facing today is the low availability of SAP Birch grades. We are all fully aware of the massive closure (permanently or temporarily) of lumber mills and pulp and paper mills. These closures have resulted in substantially fewer logs being cut and this has had a direct, negative impact on the volume of higher grade veneer logs that are available for processing. So long as softwood and pulp demand remain, so will be the supply of our veneer logs. Our industry is part of their cutting plan, so we cannot get into the forest all alone.


The “basket” of log available is smaller, so the quality to choose from is declining to supply what the market is looking for. So this creates another consequence. Hardwood mills have had to run a lower grade log mix. This has resulted in a greater percentage of mid to low grade veneer being produced. These grades have been difficult to sell in recent years due to the increase in cheaper imported asian plywood (primarily Chinese). To date, the market has been willing to accept poorer quality in exchange for cheaper pricing. Indeed, during the last several years, we all felt a strong increase in imported hardwood plywood. A considerable part of the low end mix, which was produced domestically in the past, switched over to imported plywood. This plywood offers cost advantage, but quality remains questionable. The result is the unbalance on the domestic selling mix.


Most domestic birch inventories (plywood and veneer) have been heavy to these mid-low grades and light on the higher natural and sap grades. Compounding the problem is the fact that less than 2% of what a birch log yields will meet the A Sap grade specification. Other factors at play include the fact that most users are focusing in inventory reduction, and as a result buying as selective a mix (usually heavy to the upper grades) as they can. Seasonality is another part of the problem. Summer cut logs typically yield an even lower percentage of high grades due to end stain and checking. On the bright side, the fact that fewer logs are coming out of the bush this summer may improve the overall percentage of high grade for the year.   But bottom line, we all have a log we need to move.


Two things need to happen. It is not for tomorrow that sales will match the log mix. First, the overall log availability needs to improve. Second, domestic consumption of these mid/low grades will need to grow allowing veneer suppliers to run additional volumes and move a better mix of grades.


The current economic situation doesn’t seem to help get sawmills and pulp mills back in business. But we are seeing some growing interest for those low end grade mix, but still more attention need to be given. As we work our way through this deep recession, users of high grade birch panels can improve availability by switching to comparable rotary maple products and/or by finding ways to expand their use of mid to low grade products. Historically, those customers that use a wider mix of grades are the first to be supplied with the high end as well. This may mean revisiting what is being used in current applications. One example would be pieces that call for high end sap grades only to have a dark stain applied to them. Switching to a natural or a lower sap grade specification may improve what’s available as well as the price. The ability to cope with various natural characteristics (small knots, burls, pin knots) or manufacturing defects (roughness, putty patch) also opens up what’s available and lowers cost.  Both suppliers and customers need to work together to develop yield and production techniques to have a better understanding how to face those specific characteristic.


The situation is complex but really simple to resume. Less mills currently operating = Less hardwood logs harvested = Less hardwood veneer logs to chose from (lower grade quality) = unbalance in the mix = shortage in certain grades (and Import sales taking part of the low grade sales). In today’s market we are all driven by inventory management and cost reductions. The more that everyone can do to move the entire grade mix the more we will be able to produce. This will translates into better availability of high grade products.