By Madison's Lumber Reporter
While North American softwood lumber prices
continued to climb last week, there was a
palpable reduction in the enthusiasm of buyers.
Normally by Labour Day end-users are well
stocked up with the wood they need for ongoing
building projects thus are not placing new
orders for September or October delivery.
However, all can agree that 2020 is anything but
normal. Yet the fact of economic cycles and
particularly seasonality can not be ignored.
This week will tell — if early indications are
anything to go by, at time of writing sawmills
and secondary suppliers report a noticeable
contraction in softwood lumber demand.
The latest U.S. and Canadian home building,
sales, and prices data has shown remarkable —
indeed record-breaking — activity, with
absolutely no signs of slowing down. In fact,
the business of real estate across North America
can truthfully be described as “red hot”.
Another notable development this year is an
early, and so far quite severe, storm season in
the U.S. If this continues through autumn, as
many experts say it will, plywood demand for
repairs and reconstruction will be very strong.
Even if dimension lumber prices moderate
downward to more “normal” levels, it is possible
that panel (Plywood and Oriented Strand Board)
will reach new price highs. Madison’s Lumber
Reporter will be there to report immediately to
readers if this is the case.
“ The trends of
record-breaking prices, depleted inventories,
and frustrated players at all levels persisted
last week.” — Madison’s Lumber Reporter
As lumber prices continued to reach ever-higher record levels last week,
July sales of new single-family homes in the U.S. beat market
expectations by more than 12 per cent. Meanwhile, the World Trade
Organization panel reviewing Canada’s appeal of softwood lumber duties
found American claims of harm from unfair subsidization through Canada’s
Crown tenure system largely unfounded. Elsewhere, California joined four
other states in early adoption of the 2021 International Building Code,
which includes provisions for mass timber structures up to 18 stories
tall. Players of Western S-P-F in the U.S. were at their wits’ end
trying to find lumber and studs in a world of zero availability. Sawmill
order files pushed into mid-October.
Canadian purveyors of Western S-P-F commodities described the
continually-accelerating market as “pretty unbelievable”. Last week
started with a comparatively slow Monday when the futures board was
down, but that turned out to be a mirage and sawmills were back to
selling out every morning before 7:30am, again leaving nothing available
for buyers in the U.S. cash market. Ravenous demand issued from both
sides of the border and producers extended their order files further
into October. Sales of low grade items gained more steam.
For the week ending August 28, 2020, prices of standard construction
framing dimension softwood lumber items continued to rise, achieving
levels beyond the scope of rational imagination. Benchmark softwood
lumber item Western S-P-F 2×4 #2&Btr KD price gained another +90, or +11
per cent, to US$940 mfbm (net FOB sawmill), from an already remarkable
U.S.$850 the previous week. The price for this lumber commodity was up
+$320, or +52 per cent, from one month ago. Compared to the same week in
2019, when this item was selling for U.S.$370 mfbm, it is up +$570, or
an astonishing +154 per cent.
“As Eastern S-P-F sawmill availability
remained virtually nonexistent, prices advanced yet again. Quick
shipment was a thing of the past since secondary suppliers no longer had
any real inventory to speak of. Sawmill order files were well into
October. ” — Madison’s Lumber Reporter
Far surpassing anything previously seen, last week’s Western S-P-F 2×4
price increased by +$506, or +117 per cent, relative to the one-year
rolling average price of US$434 mfbm and was up +$538, or +134 per cent,
compared to the two-year rolling average prices of U.S.$434 mfbm.
The below table is a comparison of recent highs, in June 2018, and
current August 2020 benchmark dimension Softwood Lumber 2×4 prices
compared to historical highs of 2004/05 and compared to recent lows of
September 2015:
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U.S. &
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U.S. softwood and panel markets - week 37, 2019 ( September 17,
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U.S. softwood and panel markets - week 36, 2019 ( September 10,
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U.S. softwood and panel markets - week 35, 2019 ( September 3,
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U.S. softwood and panel markets - week 34, 2019 ( August 23,
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U.S. softwood and panel markets - week 30, 2019 ( July
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U.S. softwood and panel markets - week 26, 2019 ( June 28,
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