North American Lumber Demand Remains Soft, Prices Drop Further

As the summer season approaches, the North American lumber market is experiencing a significant downturn in prices, with demand remaining soft across the board. According to Madison’s Lumber Reporter, the price of Western Spruce-Pine-Fir (S-P-F) 2×4 #2&Btr KD (RL) dropped to $356 per thousand board feet (mfbm) in the week ending June 21, down $28 or 7% from the previous week. This marks a continuous decline from the previous month and the same period last year.

Southern Yellow Pine (SYP) East Side 2×4 #2&Btr KD (RL) prices also witnessed a minor drop, falling to $355 mfbm, down $5 or 1% from the prior week. Despite a slight 1% increase from the previous month, the prices remain significantly lower compared to the same week last year, showcasing a drop of 11%.

Current Market Sentiment

The current market sentiment among lumber traders is one of caution and skepticism. Veteran players in the industry are questioning whether the ongoing tepid demand will lead to a lackluster year overall. Many traders, especially in the east, west, and south regions, are anticipating a quiet summer, with some even considering taking extended breaks.

Adding to the market’s woes, recent sawmill curtailment announcements have not managed to uplift the spirits. The May U.S. housing starts data showed a slight decline from the previous month and from May 2023. However, the total number of starts year-to-date for 2024 remains on par with last year, indicating a steady but unimpressive trend in new housing construction.

Long-term Implications

The stability in the most commonly traded lumber items suggests a continued steady pace in housing construction, albeit without significant growth. The industry’s anticipation of the annual summer slowdown is prompting many to question if there will be any meaningful uptick in lumber sales this year.

Madison’s Lumber Reporter summarized the market’s current state succinctly: “Demand for North American lumber experienced little change from last week’s tepid tone. Supply continued to outpace demand in most categories, while prices of panels showed increasing vulnerability.” This sentiment echoes the broader industry’s concerns about the balance between supply and demand and the overall health of the market as summer progresses.

As the industry enters the summer months, the outlook for lumber prices and demand remains uncertain. With prices continuing to drop and demand staying soft, traders and manufacturers alike are bracing for a potentially quiet season. The market’s future will depend heavily on how demand evolves post-summer and whether the supply adjustments made by sawmills will sufficiently balance the market dynamics.

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