02/02/2021

Thanks for your time today, price rise letter attached confirming 15% increase across all ranges effective 1st April.

A snap shot of our discussion and reasons behind these increases:

• Price increase from all sawmills started 3rd quarter of 2020
• Arrivals started 4th quarter 2020 at higher rates (we were already feeling the pain)
• With extensive delays in shipping , particularly transhipping it’s impossible to maintain supply time to match pricing in each market place
• Freight - Variance has progressed from USD $1500 to as high as USD $7500 however it looks like max has been set
• All Stevedoring companies across all ports have applied several surcharges / infrastructure fees
• US Price still either stable or increasing, coming out of winter and ultimately the pandemic - we anticipate further increase in demand and price
• Chinese New Year - this saw a flurry from Chinese buyers who had let stock decrease and are now driving demand + price across log and sawn lumber – we expected to see aggressive activity for supply post CNY
• Log cost in Europe increasing as expected, several larger entities are now switching from lumber purchase to securing log allocation. Clearly a signal of not having sufficient supply / making sure supply matches expected order intake. Further increased expected Canada / US log cost will follow once the reset price timetable is reached. Housing Starts in the US have reached 1.7m units
• The cycle is so fluid and sharp that price becomes irrelevant, most markets are only looking to secure volume

This will be no doubt, be a year to be remembered – supply is going to be ugly and we will need to contain our emotion but as always we will ride the cycle.