As is historically usual for this season, demand — and therefore prices — of
most softwood lumber items dropped during the US Thanksgiving holiday week.
This time of year is normally marked by slowing construction activity thus
lower demand for dimension lumber. Of course, the past two years have not
been normal. As forest industry players look to the end of the year, the big
question is; what is going to happen in 2023? Expectations are that supply
and demand are in better balance now than they have been since early 2021,
which gives both sellers and customers the ability to find where the new
price level will be. In these new market conditions, “new normal”, the
current price of benchmark item Western Spruce-Pine-Fir KD 2×4 #2&Btr is
hovering at just below cost-of-production for most of the large-volume
operators in British Columbia. As we head into the true slow-down at year
end, all eyes are on where the new price bottom will be.
In the week ending November 25, 2022, the price of benchmark softwood lumber
item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$475 mfbm, which is
down by -$15 or -3%, said weekly forest products industry price guide
newsletter Madison’s Lumber Reporter. This is up by +$13, or +3%, from one
month ago when it was $463.
Deepening winter weather had the effect of slowing consumption, production,
and transportation, all to relatively concurrent degrees such that no one
variable in the supply-demand equation was overstressed.
“The American Thanksgiving holiday predictably dampened lumber market
activity, particularly from midweek-on.” – Madison’s Lumber Reporter
Buyers of Western S-P-F lumber in the United States were somewhat active to
start the week as they short-covered in advance of American Thanksgiving.
Sales activity petered out from there, with the market going dead quiet by
midweek. Both primary and secondary suppliers reported an unsurprising
dearth of inquiry later in the week, while order files at sawmills remained
in the two- to three-week range. Transportation issues began to appear as
winter weather took hold in many regions, and there was much speculation
about job action in the rail sector.
Canadian suppliers of Western S-P-F lumber saw inquiry and takeaway drop off
precipitously as the week wore on. No one was surprised, as the American
Thanksgiving holiday weekend is almost always accompanied by a dip in
demand. Apparently sawmills at both the regional and national levels were
getting more amenable to counter offers with each passing day, with many
reporting an ongoing challenge in finding trading levels where they could
establish any consistent flow to business. Order files ranged from prompt
availability at more local mills to three weeks out at some of the larger
producers.
“
Limited overall supply of Southern Yellow Pine commodities was balanced
out by a drop in demand. Many players used the Thanksgiving holiday as an
opportunity to step back and assess their current inventory positions.
Prices hovered around the previous week’s levels as sawmills felt no
pressure to chase the market or boost their numbers. Order files remained
two-to three-weeks out. Suppliers were confident that more demand will come
from the multifamily and mixed commercial sectors once players are back at
their desks after the holiday weekend. ” – Madison’s Lumber Reporter
Compared to the same week last year, when it was US$634 mfbm, the price of
Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) for the week ending November 25,
2022 was down by -$170, or -26%. Compared to two years ago when it was $620,
that week’s price is down by -$145, or -23%.
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