Features
2024 softwood lumber market mid-year update
A snapshot of the North American softwood lumber market as of July
August 8, 2024 By Keta Kosman
The July post-dual national holidays in Canada and the U.S. did nothing to jolt an increase in lumber sales. As true summer weather was upon North America, any hopes of a seasonal jump in demand for lumber did not materialize. Sawmills and wholesalers alike prepared to hang “Gone Fishing” signs at their desks, so little inquiry was there in mid-July.
The rotating lumber production curtailments and sawmill downtime at least prevented prices from falling too much below cost-of-production, but low sales volumes did not provide encouragement for any immediate improvement. While no one was stocking inventory, and supply was quite tight, demand was soft enough to not cause concern among customers. So far this season, builders and contractors have been able to get the wood they needed for ongoing construction jobs easily enough, so have felt no urgency to hold inventory.
A good metric to confirm the decreased manufacturing volumes is sawmill utilization rates. This data come out monthly from the Western Wood Products Association (WWPA), based in Portland, Ore. The latest issue of the WWPA’s Lumber Track has Canadian softwood lumber production as a per cent of practical capacity relatively even compared to the same time last year, at 72 per cent in April 2024, while the U.S. is at 78 per cent, which is down from 80 per cent in April 2023.
In the week ending July 19, 2024, the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$330 mfbm. That week’s price is down $2, or one per cent from the previous week when it was $332. That week’s price is down $38, or 10 per cent from one month ago when it was $368.
Compared to the same week last year when it was $458 mfbm, that week’s price was down $128, or 28 per cent . Compared to two years ago when it was $664, that week’s price is down by $334, or 50 per cent.
Key lumber prices and market conditions take-aways – July 2024
- Wide dimension was the only remotely profitable commodity group.
- Buyers had a prevailing and reinforced expectation of quick truck shipments at a discount.
- Sawmill asking prices were a mixed bag.
- Downside momentum abated due to persistently low prices, general fatigue, and less Euro wood coming into Eastern ports.
- Too many suppliers competed for limited business.
- Discounted plywood and OSB material flowed into U.S. markets.
The Madison’s Lumber Prices Index for the week ending July 19, 2024 was $367 mfbm. This is down $2 from the previous week when it was $369, and is down 26 per cent from the same week last year when it was $499.
A dramatic drop in multi-family starts the previous month brought total housing starts in the U.S. for May down significantly. The latest data release showed a bounce back up in multi-family starts, which was enough to drive total housing starts upward.
Total U.S. housing starts in June were 1.36 million units, up three per cent from the upwardly revised 1.31 million units in May, and down more than four per cent from June 2023 when it was 1.42 million units. Single-family housing starts, which account for the bulk of homebuilding, fell more than two per cent in June compared to May, at a seasonally adjusted annual rate of 980,000 units. It however rose 5.4 per cent compared to June 2023 when it was 930,000 units.
Total building permits rose three per cent month-over-month to 1.45 million units, from 1.40 million in May, and fell three per cent compared to June 2023 when it was 1.50 million. Single-family permits dropped more than two per cent from May’s 1.0 million, at a rate of 980,000 units.
It is important to note that year-to-date new housing construction is actually up this year compared to 2023. For the first six months of 2024, single-family starts are up 16 per cent, from 449,400 units (not seasonally-adjusted) in the same time last year, to 521,800 units. Likewise, single-family permits for January to June this year are up 13 per cent to 511,500 units, compared to 453,800 units for the same time in 2023.
While there was no boost to lumber sales during this spring building season, the upward trend of new housing starts year-to-date does bode well for stable lumber demand in the remainder of this year. Meanwhile, as manufacturing volumes have remained lower than in the past for more than one year, there is a possibility that some customers will be caught short of their needed inventory.
Keta Kosman is the owner of the weekly Madison’s Lumber Reporter, the premiere source for North American softwood lumber news, prices, industry insight, and industry contacts. Established in 1952, it publishes current Canadian and U.S. construction framing dimension lumber and panel wholesaler pricing information 50 weeks a year and provides access to historical pricing as well.
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