As the building and construction sectors continue to struggle, reduced demand for lumber is depressing prices this year.
In the spring a builder’s thoughts always turn to buying wood. But not so much this year.
With both residential and commercial building not getting its usual bump in the spring season, lumber prices are at levels the industry hasn’t seen since the early days of the pandemic. And while low prices are good news for those needing lumber for their projects, it means mills and suppliers are facing economic hardships that could impact the industry down the road.
A recent Wall Street Journal article reported that “lumber prices have tumbled into (the) building season,” indicating that lumber futures are down 27 percent since mid-March. “Wood has piled up in the market and pushed cash prices even lower.”
The Journal quotes the Random Lengths pricing service reporting that the price for framing lumber composite was at its lowest level since May 2020, down to $366. Southern pine composite was down to $355, also its lowest since the early days of the pandemic when construction plummeted.
“The spring rally never happened,” the newspaper quotes wood market consultant Russ Taylor. “No one is making much money at these prices.”
Lumber mills both in the U.S. and Canada are cutting work forces, curtailing production for periods of time or even shutting down completely, the Journal said. This could eventually cause lumber prices to go back up if supplies are lowered over the next few months. “You have a lot of producers that are operating below cash flow break-even,” the WSJ quotes Weyerhaeuser CEO Devin Stockfish telling an investor conference. “People will do that for some period of time, but they won’t do it indefinitely.”
