New Year 2021 starts off with rising lumber prices
January 13, 2021 By Madison's Lumber Reporter
In the first full week back to work of 2021, the latest data of housing construction and home sales out of the U.S. shows a marked increase over the previous year. The economic indicators for future home building, and remodelling, are rosy. Macroeconomic conditions in the U.S. remain murky; however, there are two things that can be solidly stated even at this part of the year: one is that home builders are reporting difficulty in finding lots for purchase. The other is that there are challenges finding additional workers to hire. Indeed, the latest U.S. data release shows the 472,500 new residential construction jobs created from May through December 2020 offset the 456,800 jobs that were lost in April and May. As well, for full-year 2020, home building and remodelling added 57,200 net jobs in the U.S.
While it’s too early in the year to say where the lumber market will go, it can be assured that prices will not go down during 2021.
“Lumber sales barely missed a step over the holiday break. As 2021 dawned, rail service got significantly worse.” — Madison’s Lumber Reporter
The traditional slowdown associated with the holiday season was much shorter and smaller in magnitude than in previous years, according to Western S-P-F purveyors in the U.S. Demand did not wane; producers boosted their asking prices by double digits or more.
Canadian Western S-P-F producers reported demand tapered off at the end of 2020, partially due to lockdowns and curfews in Quebec, so sawmills tried to focus on selling into the U.S. market. However, persistent lack of rail car supply caused logistical headaches, pushing delivery times into mid-March. Sawmill order files were already into the first week of February.
Unstoppable demand over the holiday season pushed prices relentlessly higher. For the week ending Jan. 8, 2021, benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr prices rose to U.S. $944 mfbm, which is up another +$70, or +8%, over the previous week. Last week’s price is +$324, or +52%, more than it was one month ago when it was $620.
“Sales of Eastern S-P-F in Eastern Canada were comparatively slow to start the New Year but by Tuesday of last week business picked up. Although numb to sticker shock by this point, buyers nevertheless did double takes at more triple-digit price increases, as they assessed their bare inventories and calculated their next moves.” — Madison’s Lumber Reporter
Compared to the price one-year-ago, of U.S. $402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2×4 #2&Btr was selling for U.S. $944 mfbm which is +$542, or +135% more.
The below table is a comparison of recent highs, in Sept. 2020, and current Jan. 2021 benchmark dimension softwood lumber 2×4 prices, compared to historical highs of June 2018 and compared to recent lows of Sept. 2015:
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