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Softwood lumber prices come up off seasonal lows: Madison’s

January 2023 is well under way, and with it the usual seasonal large-volume buying by the big U.S. home builders has begun. Because they want the wood needed for their projects on the ground before spring building activity, customers make their orders now to accommodate possibly extended delivery times. As such, it is usual for lumber prices to start rising into the end of January. In addition to that normal seasonal trend, there has been in the past couple of months significant lumber production volumes taken offline due to various downtime and curtailment announcements. The majority of these have been in British Columbia, while other jurisdictions in North America have also slowed manufacturing. Expectations are that these facilities will be coming back online definitely during February, if they have not already.

In the week ending January 20, the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$374 mfbm, which is up by $4 or one per cent, from the previous week when it was US$370 mfbm. This is down by $19, or five per cent, from one month ago when it was $393.

Sawmills extended their order files into early February in numerous cases.

“Sales of lumber and stud markets took a palpable step forward while that of panels continued to lag behind.” – Madison’s Lumber Reporter

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Demand for Western S-P-F jumped out of the gate this holiday-shortened week in the United States. Buyers weren’t speculating or going after large volumes just yet, but overall demand was noticeably up for the first time in January 2023. Field inventories remained low, consistent with the time of year. One experienced player noted that this was the most positive tone the market has seen in the last several months. Producers were encouraged by consistent sales and nudged their asking prices up on many key widths and trims. Demand for WSPF studs was stronger than for dimension items. Players were thankful that transportation was a non-issue, especially after the challenges experienced last year at this time.

Canadian Western W-S-P-F producers boosted their asking prices and pushed out their order files as promising demand came from buyers on both sides of the border. Sawmills reported order files into late-January or early-February, with sales of 2×4 and 2×6 R/L dimension leading the way. Buyers were apparently reluctantly looking toward their spring requirements instead of just replenishing immediate needs on a weekly basis. Overall supply levels remained subdued thanks to recent curtailment announcements by several major producers. As sales volumes got going, availability tightened up commensurately.

“Sales of kiln-dried Douglas-fir lumber and studs finally seemed to turn a corner, with sawmill asking prices appearing to bottom out in most cases. Secondary suppliers in the United States reported much better trading than the previous week. Following the zeitgeist in the broader dimension lumber market, 2×6 was one of the most sought-after and tightest widths min terms of availability. Scant supply of wides was still significantly behind firm demand. Log supply was an ongoing issue, especially with heavy and relentless precipitation blanketing most of the Pacific Northwest. Hauling water-laden Douglas-fir logs on mushy forest roads was essentially an impossible task.” — Madison’s Lumber Reporter

Compared to the same week last year, when it was US$1,170 mfbm, the price of Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) for the week ending January 20, was down by $796, or 68 per cent. Compared to two years ago when it was $944, that week’s price is down by $570, or 60 per cent.