North American prices of softwood lumber continue to rise as demand flows East
Unabated purchasing of North American construction framing softwood lumber moved prices higher last week, as customers turned to the eastern market. Buyer dismay at record-high Western S-P-F prices brought significant demand for Eastern S-P-F, with those prices responding upward accordingly. Confusion reigned throughout the marketplace, with the closing of July lumber futures contract on the Chicago Mercantile Exchange – also at record highs – providing no clarity, according to Madison’s Lumber Reporter.
The fact was that end-users needed wood, so producers and secondary suppliers alike could only pick through their weak inventories to find the necessary stock. Sawmills were already booked with production orders well into August thus continuing to rise prices was the only option.
Western S-P-F purveyors in the United States described another crazy week on their side of the border. Producers continued to struggle to keep up with relentless demand as they raised asking prices ever higher as wholesalers and distributers couldn’t fill the gap with their depleted inventories, and buyers clamoured for any stick of wood they could find regardless of cost.
Primary and secondary suppliers of Western S-P-F commodities in Canada had very tight inventories while demand only seemed to be intensifying with each passing week. Sawmill order files were into mid- to late-August, and worsening rail car supply has put mills up to three weeks late on orders already made. Producers continued to sell out before 8:00am every day, ending up with little or no items on offer for ravenous US customers. Standard Grade #2&Btr and Appearance Grade High Line dimension soared in price again, rising between $40 and $56 with zero pushback from frantic buyers.
For the week ending July 17, 2020, prices of standard construction framing dimension softwood lumber items increased yet further. Benchmark softwood lumber item Western S-P-F 2×4 #2&Btr KD popped higher still, up by +50, or +10%, to US$554 mfbm, from US$504 the previous week. The price for this lumber commodity was up +$160, or +41%, from one month ago. Compared to the same week in 2019 this price is up +$186, or +51%.
Eastern S-P-F dealers were angered by sales taking place as high as $150 over print. Frustration was present through the supply chain as folks scrambled to cover jobs but just couldn’t find the wood. Prices were considerably higher again last week, with reload and distribution levels higher than sawmills. Producers in the US were able to deliver product in roughly two weeks, taking advantage of the fact that Quebec mills were entering their two-week summer vacation period.
Rising enough to match the recent-record highs of mid-2018, last week’s Western S-P-F 2×4 price improved another +$165, or +42%, relative to both the 1-year and 2-year rolling average prices of US$389 mfbm (for both 2019 and 2018).
The below table is a comparison of recent highs, in June 2018, and current July 2020 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of September 2015: