After quadrupling in price in only a short twelve months, Canadian lumber prices have finally settled down, plunging about 70 per cent since May.
Lumber prices in North America reached their peak in the late spring of 2021. Demand for lumber soared after COVID-19 lockdowns resulted in a building boom along with many stuck-at-home people taking to renovation projects to pass the lockdown time.
In late August, U.S. lumber futures were trading at $470 per thousand board feet. This is after reaching a high of $1,700 per thousand board feet in May.
According to a recent National Post report, with the easing of COVID-19 restrictions in North America came a decreased demand
for materials from the
do-it-yourself market.
According to the Post, the DIY market accounts for a sizable 20 per cent share of lumber sales in Canada.
Prices cooled because of lower demand for lumber combined with many companies ramping up production quickly.
In British Columbia, which makes up about 14 per cent of North American production, prices are around $430 per thousand board feet for SPF 2x4, according to government statistics. This is down from a high of $1,640 per thousand board feet for SPF 2x4 in May.
According to a recent Bloomberg report, one mill in Western Canada has been forced to stop production due to an unprecedented collapse in lumber prices combined with high log costs.
The Post also noted that the lumber supply will increase as sawmill owners “take advantage of recent bumper profits to build more mills and add workers, which will help ease a protracted labour shortage.”
Many larger mills saw high earnings because of the lumber price boom. However, some experts such as Samuel Burman, a commodities economist at Capital Economics, say prices will remain in the “$500 to $600 per thousand board feet” for the remainder of 2021.
High lumber prices in the early half of 2021 put a strain on the supply chain side of material made of wood for new home and construction builds. Suppliers of raw materials and home builders were forced to absorb the higher costs due to locked-in contact rates.
While most contractors and woodworking companies honoured existing contracts, the few instances of reported price gouging by some seem to have been quelled for now due to prices being more reasonable.
Amongst AWMAC members, higher lumber prices are an ongoing concern as it puts a strain on the budgets of many of our members who supply construction projects at already pre-set rates.
As the national voice of Canada’s architectural woodwork industry, AWMAC continues to advocate for long-term growth and financial stability for Canada’s woodwork manufacturing sector.
To learn more about us, visit our website at
www.awmac.com
