Since Mid-2022 When Interest Rates, Especially Mortgage Lending Rates,
Starting Going Up Home Builders And Lumber Buyers Became Extremely Cautious
In Their Purchasing Of Manufactured Wood Products.
In general players avoided stocking up on lumber inventory, mostly out of
concern that prices might fall and they might get stuck with expensive
material they would have to sell at a loss.
Specifically veteran players, who were accustomed to prices at much lower
levels than currently, chose to hold off buying to see if prices would drop
back to what was historic.
The fact is however, that since 2020 to 2022 there is a new floor, and
lumber prices will never return to what were the lows in 2010. This is
because the cost-of-production for sawmills has essentially doubled in the
past five years.
The ongoing uncertainty of macroeconomic conditions nationally and warfare
globally is doing nothing to restore confidence.
For the time being customer demand is served promptly by sawmills and lumber
manufacturers; however if there is a bounce — even a small one — in sales of
wood, either for new home building or for reconstruction after storms,
shortages will appear almost immediately. Should this happen, anyone caught
without wood they need for ongoing projects could be facing quite a price
shock.
In the week ending June 14, 2024, the price of benchmark softwood lumber
item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$384 mfbm. This is
flat from the previous week when it was $384.
That week’s price is up +$1, or 0%, from one month ago when it was $383.
The prevailing sentiment in solid wood commodity trading was uncertain to
negative this week. Sales of panels remained conspicuously sloppy compared
to dimension and studs.
KEY TAKE-AWAYS:
Overall sentiment remained uncertain to negative.
Mild discounts were prevalent as producers looked to move some of their
built-up material.
Supply was palpably ahead of subpar demand.
Field inventories remained exceptionally lean.
Opportunistic buyers flitted from supplier to supplier, feeling they had the
upper hand.
Producers did their best to hold the line in terms of price, often not
succeeding.
Sawmill order files continued to shrink as it remained a struggle to extend
lead times on anything..
MADISON’S BENCHMARK TOP-SIX SOFTWOOD LUMBER AND PANEL PRICES: MONTHLY
AVERAGES
Compared To The Same Week Last Year, When It Was Us$390 Mfbm, The Price Of
Western Spruce-Pine-Fir 2×4 #2&Btr Kd (Rl) For The Week Ending June 14, 2024
Was Down -$6, Or -2%.
Compared To Two Years Ago When It Was $660, That Week’S Price Is Down By
-$276, Or -42%.
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