As market conditions stabilized, some North American construction framing dimension softwood lumber prices fell further, others were flat, and still others actually rose somewhat, according to Madison’s Lumber Reporter.
After a few weeks of seeming free-fall, most lumber prices stabilized last week as the supply-demand balance corrected nicely. Suppliers in Canada and the US saw more orders coming in as end-users continued to run on extremely weak inventories. Buyer reluctance in the past few weeks, while prices were falling and production remained high, evaporated. Customers could no longer wait to see if prices would fall further. Sawmill order files actually grew, for some products even into December which is quite unusual for this time of year. Producers fielded customer calls with glee, and looked forward to the US Thanksgiving holiday next week — which is usually the end of substantial lumber sales across North America until the beginning of the following year.
As has been said in many quarters in recent months; this is not a normal year and no one knows how 2020 will end. One thing is certain, as of mid-November there seems to be no stopping of demand for solid wood products and wood building material.
A sense of urgency developed last week among buyers of US Western S-P-F. The market appeared to be reversing and persistently bare field inventories lit a fire under customers’ collective cheeks. A resultant rush of business cleaned out most of the volume accumulated by both primary and secondary suppliers. Sawmill order files were pushed to at least two weeks out, with virtually nothing left for earlier shipment by the end of the week. Considering the already-delayed state of rail cars, limited availability at all levels, and the fact that buyers had not built up inventory to see them through the winter, producers had expected to subsist on consistent hand-to-mouth business into spring.
Last week manufacturers of Western S-P-F in Canada were able to harness the sales momentum they saw developing the previous week, keeping firm on pricing for materials they didn’t push and selling at new levels. Prices of standard-grade, #2&Btr 2x4 R/L, and utility-grade #3 2x6 R/L, each climbed $10 to US$590 and US$300 mfbm respectively. Demand wasn’t isolated to a few pockets either, as buyers from every corner of North America jumped in to cover their depleted inventories when they saw the market turn. Sawmill order files were all of a sudden into the week of December 7th, with prior availability drying up quickly on all other items.
For the week ending November 13, 2020 the price of benchmark softwood lumber commodity item Western S-P-F KD 2x4 #2&Btr reversed recent drops, to climb +$10, or +2%, to US$590 mfbm, said Madison’s Lumber Reporter. This week's price is -$370, or -39%, less than it was one month ago. Compared to one year ago, this price is up +$194, or +49%.
Compared to the 1-year rolling average price of US$534 mfbm, last week Western S-P-F KD 2x4 #2&Btr was selling for +$56, or +10% more, and was up +$139, or +31%, compared to the 2-year rolling average price of US$451 mfbm.
The below table is a comparison of recent highs, in June 2018, and current November 2020 benchmark dimension Softwood Lumber 2x4 prices compared to historical highs of 2004/05 and compared to recent lows of September 2015:
