Softwood lumber dimension prices stop falling, with some bouncebacks
The best description to characterize the movement of North American construction framing dimension softwood lumber wholesaler prices last week is “waffling.”
Indeed, benchmark Western Spruce-Pine-Fir KD 2×4 #2&Btr price landed exactly where it had been two weeks ago, with Friday’s print in Madison’s Lumber Reporter at US$354 mfbm, having lost one per cent (or $4) from the previous week’s US$358.
WSPF 2×6 exhibited the exact same price changes.
Trading of lumber futures on the Chicago Mercantile Commission, meanwhile, went from being on-par with the cash market for the January 15 contract to a discount of approximately $10 Monday.
Trading volumes remained low as demand was muted in the usually-quiet week following the U.S. Thanksgiving long weekend. What orders were booked were for fill-in and immediate needs only. Some customers were willing to pay steady prices that sawmills were quoting, while many others preferred to wait and see if levels would fall yet more.
In this slowing time of year for building in North America, log buyers for China have been out actively sourcing wood in advance of Spring Break. This newer seasonal cycle, of large-volume log and lumber sales to Asia in 4Q, tends to keep the bottom for annual Canadian and U.S. lumber prices higher than it was prior to 2011 when this new trend started emerging.
Part of the reason for such a sharp drop in almost all lumber prices toward the end of 2018 is the terrible wildfire in British Columbia in 2017. Those fires took out a significant amount of both immediate and longer-term timber supply from manufacturing facilities in that province. As those logs were used up, several B.C. companies in 3Q 2018 announced permanent closures. These widely-ranging lumber prices of 2017/18 should start settling back into normal territory for 1Q 2019.
Whatever “normal” will be; there is definitely a new normal for Canadian and U.S. lumber prices compared to the way the market operated a decade ago and longer.