The practice of customers to stick to just-in-time buying, held for the better part of the past year, created a situation of low field inventories. As construction activity continued across the continent, customers found themselves purchasing more wood for immediate needs. This increased demand pushed sawmill order files well into September, providing suppliers the ability to reject counter-offers and raise prices on some items.
The historical seasonal trend has been for home building to slow down in September, thus lowered lumber sales volumes and falling prices. The past three years have not followed the previously normal seasonal cycle, so many questions remain about how the lumber market will look this autumn.
Prompt availability was increasingly difficult to come by. Suppliers with readily available material that could be shipped in a timely manner were highly sought after.
In the week ending August 25, 2023, the price of benchmark softwood lumber item Western Spruce-Pine-Fir 2×4 #2&Btr KD (RL) was US$420 mfbm.
This is up by +$10, or +2%, compared to the previous week when it was $410, said weekly forest products industry price guide newsletter Madison’s Lumber Reporter.
That week’s price is down by -$35, or -8%, from one month ago when it was $455.
Purveyors of Western S-P-F lumber and studs in the United States described a steadily strengthening market. The deep counter offers of early August faded away and players reported improving liquidity most days. One experienced wholesaler related their position: really busy but not investing in the future.
Sales of studs were a mixed bag, with demand for eight-footers showing strength while sales of 2×4- and 2×6-10’s have been soft for weeks.
The trend in that latter trim was apparently caused by a shift in home construction to smaller and shorter builds as a cost-cutting measure in response to elevated material prices, interest rates, and inflation numbers.
Western S-P-F lumber suppliers in Western Canada were busy with customers on both sides of the border Buyers remained circumspect when it came to longer coverage even as repeat just-in-time business was healthy and consistent. This sustained strategy begat thin field inventories across the board, as has been the case throughout August so far.
Sales of bread-and-butter narrows were the strongest, particularly 2×4 R/L premium and standard grade.
Meanwhile, the ongoing catastrophic wildfires in BC – and across virtually all of Southern Canada – continued to foster a sense of unease in reference to long-term supply.
COMPARED TO THE SAME WEEK LAST YEAR, WHEN IT WAS US$624 MFBM, THE PRICE OF WESTERN SPRUCE-PINE-FIR 2×4 #2&BTR KD (RL) FOR THE WEEK ENDING AUGUST 25, 2023 WAS DOWN BY -$204, OR -33%.
read the full report: madisonsreport.com