Unprecedented volatility.
Those are probably the two best words to describe lumber prices.
Earlier this week, prices reached a new record with trading futures for May reaching over $1,500 per thousand board feet.
While BC lumber producers are reaping the benefits, organizations like the US National Association of Homebuilders (NAHB) are calling on newly-elected President Joe Biden and his government to reach a new long-term trade contract when it comes to Canadian softwood lumber.
On April 22nd, a letter was penned to United States Trade Representative Katherine Tai stating lumber prices have tripled when compared to the same month last year.
In an interview with Vista Radio, Council of Forest Industries President Susan Yurkovich likes the fact the NAHB is advocating for an end to this problem.
“The duties get priced into the cost of lumber. It’s been very curious to us that the industry in the US has basically been allowed to tax their own consumers by putting in this unsound duty on Canadian imports of lumber.”
“When you have a high-priced environment as we do right now because of where supply and demand are it’s exacerbated by having these duties applied to Canadian lumber.”
Yurkovich added the higher lumber prices are part in parcel of a massive disruption to the supply chain once the COVID-19 pandemic threw the industry another curveball.
“When had a massive disruption in 2020 when virtually all of our production shut down for at least for a period of time.”
“When we got back up and running, we had very strong demand from the repair and remodeling sector but also very strong housing demand. That’s because there has been an underbuild in the US for quite some time and you have a large demographic group moving into the household formation.”
She adds low inventory levels are also having an impact on building materials such as panel products, doors, windows, and appliances.
“However, there is an opportunity to at least address part of that price impact by addressing these unwarranted duties on Canadian lumber that goes to the United States.”
Pandemic aside, Yurkovich stated the first quarter of this year has been challenging to say the least for the forest industry.
“You know, if you think back a year ago, prices were under $300 and now our lumber futures are up between $1500 and $1600 per thousand board feet range – unprecedented volatility, just a massive swing.”
Yurkovich mentioned the market challenges we are seeing are not specific to North America.
“You have to remember that supply chains across the globe have been affected by this pandemic. Materials that are coming from places that are impacted by transportation are playing a role in the current pricing.”
The NAHB noted to Tai the antidumping and countervailing duties along with tariffs on other products are contributing to higher construction costs, leading to more expensive housing.