Proposals to reduce some design values for Southern pine could affect demand next year for more than 1 billion board feet of visually graded lumber--at least one-eighth of the Southern pine dimensional lumber milled in 2011--as well as trigger longer-term changes in the price and popularity of machine-rated Southern pine, engineered lumber, and other types of softwood lumber, Forest Economic Advisors (FEA) predicted today.
The Westford, Mass.-based consultancy's new 20-page report on the issue represents what it describes as the first major attempt to quantify the potential impact of the proposed changes on such major housing components as roof trusses and rafters, floor joists and trusses, and various beams and headers. All those will be affected to varying degrees, and the likely alternatives to be used in place of visually graded Southern pine also will vary, FEA said.
When these shifts would occur depends on when the American Lumber Standards Committee (ALSC), a quasi-governmental agency that oversees lumber standard-setting groups, will take action on a proposal by the Southern Pine Inspection Bureau (SPIB) to reduce three key design values attributed to the wood by 22% to 39%. Truss and joist companies as well as framers and general contractors rely on these design values--which deal with issues such as bending, tension, and compression--to make certain they are building certifiably safe structures.
Trade groups for lumberyards and building component manufacturers sounded the alarm in mid-October when they thought ALSC could decide at its Oct. 20 meeting to adopt SPIB's proposal. But after hearing of those protests, ALSC decided to hold a second hearing on the issue on Jan. 5. It could act as soon as then to OK the changes, and once it does the new values would go into effect immediately. This scares lumberyard and distribution association executives because they fear such a move would automatically depress the value of the Southern pine they have on hand, while building component makers worry about potential lawsuits involving homes that were just built (or are currently being built) to the old standards.
FEA's report attempts to quantify both the loss in value and the shift in supply and demand for various building products that it expects will result from the changes in Southern pine's design values.
"A change of this magnitude will have a marked effect on the supply, demand, and prices for Southern pine dimensional lumber, as well as on the value of standing Southern pine timber," it declared. "It also will have a ripple effect on the supply, demand, and prices of structural grades of MSR [machine stress-rated lumber], engineered lumber, and potentially on other North American softwood species."
The changes matter particularly much to truss and joist makers because visually graded Southern pine currently is rated higher in bending, tension, and compression than the other popular softwood lumber species: Douglas fir, Spruce-Pine-Fir (known popularly as SPF), and Hem-fir. But if SPIB's proposal becomes the rule, its design values will trace all the others--at least until the rating groups for those other species fulfill ALSC's request that they test their own products and see if their design values need adjusting.
How those reduced values will affect Southern pine depends on the products it's used in, FEA noted. For instance, it estimates the changes won't affect 35% of the board feet used in making roof trusses because that wood is used in web members, which typically don't need to have hiigh tension and compression values. Likewise, roughly two-thirds of the Southern pine used in rafters wouldn't be affected, but potentially 100% of the wood in floor joists would.
Just as the problem varies, so does the solution. FEA believes most makers of roof trusses will substitute visually graded Southern pine, which is affected by the changes, with machine-rated pine, which is exempt. For floor joists, some contractors will shift to engineered I-joists while others will find it more economical to use MSR pine. Builders of roof rafters might simply choose to put in more of what they already use, or perhaps switch species if it's available and affordable. And contractors who have long spans to cross might switch to laminated or glulam lumber.
FEA also addressed fears that there isn't enough machine-rated lumber to meet the potential increase in demand. Less than 1% of Southern pine produced today is machine-rated, FEA noted. "However, if the proposed values go into effect, not only will MSR be a good manufacturer bet, but both prices and demand for MSR in the South are likely to rise," it said. "We estimate that the incremental demand for MSR in the South will be over 400 million board feet in 2012, pushing the total (incremental demand + existing demand) annual Southern pine MSR demand to 550 million board feet for the year." And based on potential capacity at the 22 Southern mills with MSR machines, FEA estimated that those mills could churn out roughly 650 million board feet per year.
Thinking longer-term, however, FEA said that there could be a squeeze in demand for machine-rated Southern pine because of expected reductions in supplies of other species. These include the effects of the beetle kill across huge swaths of British Columbia and possible reductions in allowable cutting of black spruce in Quebec. "The confluence of these events could cause a supply crunch for MSR lumber," FEA said, "and we could see sustained $100+ per million-board-feet premiums toward the middle part of the decade."
To purchase a copy of the report, contact the group's website.