British Columbia (BC) declared its first state of emergency in 14 years July 2nd, significantly impacting residents and commerce. The worst fires are in an area where a large oil pipeline sits and is also home to a lot of mining, ranching, and forestry. Over 375 fires, thought to have originated from lightning storms and human activity, have swept across BC, displacing nearly 40,000 people from their homes.
The total impacts of these fires are widespread, as BC is the world’s biggest exporter of softwood lumber. This tragedy is occurring on the heels of a second countervailing tariff placed on Canadian lumber by the US in 3 months. The prices have been volatile with that alone; with the fires, prices continue to rise and remain unpredictable.
So far, numerous mills have closed but have not been destroyed by the fires. The lumber supply is definitely an issue, however. The construction industry is at a seasonal peak, so anything affecting supply now will have a heavy impact on pricing. Thus far, prices have already risen.
According to CBC News in Canada’s article,” Lumber prices see ‘big jump’ after wildfires in B.C.” just a week ago, “The benchmark price of Western spruce-pine-fir lumber rose 7.12 per cent to $406 US per thousand board feet from $379 US, according to figures from Random Lengths, which tracks lumber and panel prices.”
The article references analyst with BMO Capital Markets, Ketan Mamtora, who anticipates prices will rise between six and eight per cent over the next few weeks. If mills sustain damage or stay shut for months, Mamtora predicts that prices could rise between 15 and 17%.
For US buyers, prices are expected to continue to rise by as much as 20%. They are advised to only purchase what is needed to get through August.
Some of the mills that have been affected thus far are: West Fraser Timber Co., Norbord Inc., and Tolko Industries Ltd. Tolko posted an announcement that its Soda Creek and Lakeview mills won’t be operational “for the foreseeable future.”
The fires are also affecting transportation, as numerous highways have been closed.
All of these factors are affecting US companies who rely on lumber from BC for business. If you’re a manufacturer who depends on lumber for pallets, containers, or packaging, talk to Packnet about pricing changes and/or alternative options to lumber. We specialize in these solutions and remain informed the most current laws and news pertaining to lumber: 952-944-9124.