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Home arrow News arrow Business arrow Low log prices spur interest in alternative uses

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Low log prices spur interest in alternative uses

Baker City company turning logging waste into firewood, and other viable options might include making landscaping mulch


From left, Lane Perry of Elkhorn Biomass in Baker City, Chuck Gambil of Forest Capital and Rick Wagner, biomass coordinator with the Oregon Department of Forestry, talked about the potential market for bundles of firewood split and wrapped at Elkhorn Biomass.
From left, Lane Perry of Elkhorn Biomass in Baker City, Chuck Gambil of Forest Capital and Rick Wagner, biomass coordinator with the Oregon Department of Forestry, talked about the potential market for bundles of firewood split and wrapped at Elkhorn Biomass.
The depressed economy and nationwide housing slump have driven log prices down by as much as 50 percent, hurting forest landowners and slashing revenues available for projects designed to improve forest health and reduce the risk of wildfires.

“We are seeing some of the lowest log prices we have seen in many years,” said Bob Parker, forestry agent with the Oregon State University Extension Service in Baker County.

As an example, Parker said 18-inch diameter ponderosa pine logs sold to Boise Cascade in La Grande this time last year brought $550 to $650 per 1,000 board-feet, depending on grade.

Today, similar logs are worth $300 to $350  per 1,000 board-feet — and buyers are scarce.

“The price was up around $750 per 1,000 a few years ago, and a really premium log, higher quality yellow fir, was bringing $850,” Parker said.

In his January log price report, Parker said the range of prices being offered by Boise Cascade, Kinzua, Malheur Lumber and Prairie Wood Products vary, with Douglas-fir logs of all sizes selling in the range of $300 to $350 per 1,000 board-feet; white fir around $250, and ponderosa pine $220 to $230 for 6 to 11 inches in diameter, $340 to $350 for 12 to 17 inches, $280 to $350 for 18 to 23 inches, and $350 for logs 24 inches and up.

Those prices are for sound logs that can be cut into lumber.

Parker said prices for lower-quality logs, suitable for chips, pulp, mulch, firewood or other less valuable products, are so low that it’s not worth it for forest owners to have the trees cut and hauled.

“They can’t afford to take it out of the woods,” Parker said, adding that the current log and chip wood prices are so low that “it’s economically difficult to do forest improvement work.”

With sawmills closing or cutting back across the country, Parker said forest landowners in Baker County and across the Northwest are looking for alternative markets for logs and scrap wood.

To help with that effort, the Extension Service put on a workshop in Baker City last week for forest owners.

Nick Korn, regional sales manager for Rotochopper Inc., talked about a new portable wood-processing machine that grinds all kinds of wood wastes into uniform-sized chips or mulch that are colored with dyes and then ready to sell to nurseries and landscapers.

Korn said the Rotochopper can also be set to grind wood wastes into fine particles used in either fireplace logs or a compressed wood briquettes, which are about the size of a hockey puck and can be burned like coal or wood pellets.

Traditional wood chips being sold for hog fuel or to pulp and paper mills are bringing $25 to $35 a ton, down from $60 to $85 a year ago. Korn said the newer generation of wood chippers produces a more consistent quality of wood chips that sells for $20 to $30 a yard (there’s four to five yards in a ton) at nurseries and landscape wholesalers.      

As part of last week’s workshop, forest landowners also toured the Elkhorn biomass plant in Baker City, where the company is paying $60 per cord for logs delivered to the former Ellingson Mill site.

There, the logs are split and packaged for sale to grocery stores, hardware stores and other retail outlets for firewood, said Lane Parry, a partner in the business.

“Our goal is to utilize biomass residual from forest fuels reduction,” Parry said. 

He said the idea behind Elkhorn Biomass is to create an alternative wood market around the concept of converting small logs and waste wood into energy.

“Firewood is the first step, but we hope to be grinding wood for pellets or wood briquettes for utilization in wood stoves or biomass energy plants, and we’re also in line for biofuel production for ethanol and biodiesel fuels,” Parry said.

“Initially we’re running 20 log trucks through, and we’ll see what kind of market we can build for firewood.”

To start, a half-dozen people are employed running the firewood operation.

“Most of the material we are getting right now is coming from slash piles logged three or four years ago,” Parry said. “It’s the tops from logging that normally get burned up in slash piles out in the woods.

“Instead of it going up in smoke, we hope to capture the energy out of it,” he said.

Mike  Allstott, of Affiliated Resources lumber brokers in La Grande, said log prices are low because of the economic downturn and the slumping market for new homes, recreational vehicles and other products.

“We buy and sell structural wood panels that go into manufactured housing, trailer manufacturing, boat manufacturing and other structural uses. Sales are down 75 percent to 80 percent,” Allstott said.

“We sell finished materials. Everything is depressed. Everything is low. Lumber is extremely low, so there’s no reason to buy logs,” Allstott said.

He said the current deflation in the housing market is a reaction to several years of unsustainable housing starts.

“It will be down for awhile, and then it will go the other way,” Allstott said.

He expects log and lumber prices to go through the roof when demand picks for building materials picks up again.

“When we get an uptick in housing, lumber and log prices will go sky high because so many mills closed and there won’t be enough mill capacity to keep up,” he said.

“There will be a severe shortage and the pries of logs and finished lumber will suddenly go very high,” Allstott said.

“It’s anybody’s guess when that will happen — possibly in the third quarter of 2009 or in 2010, I don’t know.”

While low log prices may be putting the squeeze on small woodland owners and logging companies, Richard Hindman, owner of Cashway Lumber in Baker City, said prices for framing lumber are about as low as he can remember.

“If you are planning to build a new home or do some remodeling, and have the money, I would think this would be a very good time to buy lumber,” Hindman said.

“The western fir prices are probably as low as they will ever be,” Hindman said.

As an example, he said the wholesale price of 8-foot long 2-by-4’s is around $320 per 1,000 board-feet, down from $400 to $500 a few months ago.

However, he said with lumber mills in Northeastern Oregon and across the country scaling back or closing, certain types of lumber are in short supply, and shortages lead to higher prices.

“I’ve had a little trouble getting some material,” Hindman said. “Shortages can cause big price swings.”

At one point, he said cuts in production of pressed sheeting used in home and building construction and remodeling sank to a low of $6 to $7 a sheet, then rose to about $15 a sheet when production dropped below demand.

While lumber sales are down a little at Cashway Lumber this winter, Hindman said his business has not been affected nearly as much as lumber yards in larger cities that sell primarily to contractors that build new homes.

“At some lumber yards all they do is new construction, and those people are having tough times,” Hindman said.

Some of the larger lumber chains have closed up to one-third of their stores across the country, including Oregon, but Hindman said Baker County hasn’t been affected that much because there wasn’t as much new construction here as in some areas when the housing bubble burst last year.

“Our business depends on hardware, lumber and all sorts of things. We are already in remodeling in a big way,” Hindman said.

 

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