After some big drops last month, the price of most North American construction framing dimension softwood lumber commodities fell further last week, but by smaller amounts. The supply-demand balance seems to be correcting, due to ongoing strong customers appetite even as the usual autumn slow-down for building activity is upon us.
Sawmill order files have been reduced to mere days, which is normal for this time of year. As prices were plummeting in recent weeks customers delayed purchases in the hopes that supplier quotes would fall further; however, many could not delay ordering much-needed wood. This provided sellers the opportunity to keep prices somewhat aloft. A two-tier market has formed, as secondary suppliers (wholesalers, reloads) offered wood at much lower prices than lumber manufacturers did. Log supply remains good at most lumber manufacturing facilities. However, there are rumblings that in the British Columbia north some sawmills are having trouble getting logs into their yards.
Producers of Western S-P-F commodities in the U.S. were under more pressure last week to adjust their asking prices to tradable levels. Order files at sawmills marched closer to prompt and a large contingent of buyers impressively continued to sit on their hands even as their inventories ran down to pavement. Sawmills remained aggressively in search of orders and increasingly amenable to deep counter offers to keep their wood moving to buyers. Still, sales volumes were low.
While Western S-P-F sawmills in Canada maintained a tenuous two-week order file on bread and butter #2&Btr items, availability of short stock and other accumulated widths and grades started to pop up all over. As prices continued to pull back – between $20 and $80 in standard and high grade – sawmills were able to get some sales traction. Despite the overall endemic lack of wood in downstream inventories, sawmills had to fervently seek business all week and accept deeper counters than they may have anticipated.
For the week ending Oct. 30, 2020 the price of benchmark softwood lumber commodity item Western S-P-F KD 2×4 #2&Btr corrected down, by -$40, or -6%, to U.S. $660 mfbm. This week’s price is -$300, or -31%, less than it was one month ago. Closing the massive gap of earlier this year, compared to one year ago, this price is up +$264, or +67%.
Compared to the one-year rolling average price of U.S. $527 mfbm, last week Western S-P-F KD 2×4 #2&Btr was selling for +$133, or +25% more, and was up +$215, or +48%, compared to the two-year rolling average price of U.S. $445 mfbm.
The below table is a comparison of recent highs, in June 2018, and current Oct. 2020 benchmark dimension Softwood Lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept. 2015: