US lumber prices falling 70 per cent

Friday 23 Jul 2021

US lumber prices have crashed in a short time span, taking only eight weeks to tumble 70 per cent from record highs as the party ends for forestry companies.

The price sawmills charged wholesalers – known as the cash price – was US$485 for 1,000 board feet this week for two-by-fours made from Western spruce, pine and fir (SPF), compared with US$1,630 in mid-May, according to Random Lengths, an Oregon-based company that monitors wood markets.

“The deep slide from record-shattering levels extended to an eighth week, with triple-digit price drops common across all framing lumber species,” Random Lengths said in its newsletter. This week alone, cash prices for two-by-fours fell by US$210 for 1,000 board feet of Western SPF, or a 30-per-cent decline, compared with last week’s survey.

“Despite the growing threat from wildfires in Western Canada and the Pacific Northwest, any sight of a bottom remained elusive for many producers,” Random Lengths said. The lumber craze has quickly dissipated since mid-May. Instead of wood shortages, the scene has changed to one of ample supply amid softening demand.

“Western Canadian sawmills slashed their prices again this week as apathetic buyers continued to generate tepid demand at best,” Madison’s Lumber Reporter, a Vancouver-based industry newsletter, said in its weekly commentary. Industry analysts say lumber cash prices have dipped to levels below the costs of production for some sawmills in British Columbia, where costs are higher than in the United States.

CIBC World Markets Inc. analyst Hamir Patel estimates break-even levels for sawmills in the B.C. Interior are at about US$500 to US$580 for 1,000 board feet. Despite the swift decline in prices for two-by-fours to the lowest level since November, softwood lumber markets are still stronger than in the early months of the pandemic.

Source: the globe and mail

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