Has Lumber Finally Hit Bottom?

From Madison’s Lumber Reporter

The lumber market has recently shown signs of stabilization, coinciding with the approach of two significant holidays in Canada and the United States. This period has seen most commodity prices reaching what appears to be a bottom, suggesting a potential turning point for the industry.

Current Price Analysis

As of the week ending May 17, the price of Western S-P-F 2×4 #2&Btr KD (RL) stood at US$383 per thousand board feet (mfbm). This price has remained flat compared to the previous week, which also recorded a price of $383 per mfbm. Despite this stability, the current price represents a decrease of $47, or 11%, from one month ago when it was $430 per mfbm.

In a year-over-year comparison, this week’s price is up by $23, or 6%, from $360 per mfbm recorded at the same time last year. However, the price has seen a dramatic drop from two years ago when it was an astonishing $1,107 per mfbm, marking a 64% decline.

Market Dynamics

Several key factors have influenced the current market conditions:

  • Supply and Demand: Reports indicate that supply continues to outstrip demand in most cases, contributing to the stable yet low price levels.
  • Tighter Trading: Trading has become much tighter as sawmills have cleared out most of their accumulated prompt material. This reduction in available inventory has led sawmill order files to extend into the two- to three-week range for many items.
  • Buyer Behavior: Buyers remain cautious, showing no fear of price spikes and avoiding speculative purchasing. This conservative approach has resulted in minimal interest and maintenance of only essential inventory levels.
  • Panel Mill Prices: Prices for panel mill products, such as plywood and oriented strand board (OSB), have also seen reductions. Well-stocked buyers are sitting comfortably on the sidelines, further indicating a cautious market sentiment.
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