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Softwood lumber prices increase toward 2018 highs as demand drops


July 14, 2020
By Madison’s Lumber Reporter

While demand for construction framing dimension softwood lumber continued to surpass supply last week, it was noticeable that buyer orders to sawmills were slowing down. Indeed, customer interest seemed to shift from the benchmark Western Spruce-Pine-Fir to the East Side, as prices of Eastern Spruce-Pine-Fir increased by more than that of Western.

Demand for plywood, meanwhile, was unabated for reconstruction following social unrest about racial inequality.

“Robust lumber and panel sales continued last week as supply just couldn’t keep up.” — Madison’s Lumber Reporter

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Western S-P-F producers in the US reported another stellar week during which they wished they had more material to cover unceasing inquiry from buyers. Retailers were frustrated with late shipments but were also aware that little could be done about pandemic-caused shortages of transportation equipment and labour.

large producer was sold out before 8:00am, leaving the US wholesale market wanting. Sawmill order files were at least four weeks out on all dimension lumber items.

For the week ending July 10, 2020, prices of standard construction framing dimension softwood lumber items continued sharp increases. In particular, benchmark lumber item Western S-P-F 2×4 #2&Btr KD rose further, up by +36, or +8 per cent, to US$504 mfbm, from US$468 the previous week. The price for this lumber commodity was up +$126, or +33 per cent, from one month ago. Compared to the same week in 2019 this price is up +$112, or +29 per cent.

“Sellers of Eastern S-P-F in the US reported increasing cases of substitution; as customers desperately snatching any wood they could find regardless of species or designation.” — Madison’s Lumber Reporter

As in the West, Eastern S-P-F suppliers noted that buyers had gotten used to not worrying about asking prices and instead were focussed on the simple concept of availability. Players couldn’t think of a commodity that wasn’t rabidly sought after, and any scrap of leftover inventory held by a sawmill or wholesaler was jumped on with alacrity. Lumber producer order files pushed into the back half of August as the acute shortage of wood stirred up desperation among buyers.

* Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity.

Still making big jumps and catching up to recent-record highs of mid-2018, last week’s Western S-P-F 2×4 price improved +$119, or +31 per cent, relative to the one-year rolling average price of US$385 mfbm and increased +$114, or +29 per cent, relative to the two-year rolling average price of US$390 mfbm.

The below table is a comparison of recent highs, in June 2018, and current July 2020 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015: