Buyers Reeling at Near Record-High Lumber Prices

priceincreasesIt’s been in unusually rough year for those involved in the lumber industry, and it’s looking to stay that way for now. A combination of factors like price hikes on Canadian lumber (due to tariffs imposed by the US), and supply shortage (from a number of things like hurricanes and fires) have put both mills and their customers in a position of overall struggle. Experts predicted the market would start to slowly decline in February, but the exact opposite is occurring. Prices are now reaching or exceeding record highs.

This is the first time in 20 years the industry has seen anything like this. The last time dimensional lumber or panel products hit an all-time high was in 1993. Looking at the past ten years, a spike occurred in 2013, which was eventually passed in spring of 2017 and has, for the most part, been on a steady rise since.

The general price and available supply is just one piece of this puzzle, however. Predictions, plans, and reactions of buyers and mills have everything to do with the ongoing state of the industry.

While some species were tight in supply, others were more abundant. As such, suppliers could raise the price of the latter and still sell lower than the price of the former. People have ended up paying it because overseas options aren’t proving to be competitive.

Some lumber, like 14 foot Southern Pine, was so hard to find that mills shipping within a week were in high demand. This created a short-lived surge, however, because eventually buyers held off with the belief that the market will cool down soon.

This has contributed to a couple of quieter weeks for some mills, but factors like shipping delays have caused many to fall behind on order files, giving them plenty to do while spring buying nears, and thus keeping prices up.

Unusually strong demand wasn’t just attributed to things like fires that diminished supply, or prices that pushed people to stop buying from Canada. If you recall, more than one hurricane destroyed the homes of many US residents. The housing industry, already among the most significantly impacted by the lumber trends, accelerated with warmer weather and many in need of replacement homes. This industry, along with contracts, have eaten up a significant amount of the available supplies.

Overall, the forces pushing the price hikes and the factors that are exacerbating the circumstances are creating a market that’s sustaining delayed deliveries and availabilities, and record-high prices. The most feasible alternatives are for those who can either delve into recycled or repurposed lumber, or find alternate materials altogether.

Packnet is dedicated to maintaining a purchase strategy that keeps lumber supply and prices as low as possible. We can also help you weigh alternative options for pallets and container materials so you can make the most economical decision available to you. Please contact us with questions: 952-944-9124; CustomPackagingSolutions@packnetltd.com.