Lumber Supply, Prices, Continue to be Impacted by BC Fires
While some highways and one lumber mill have reopened since the British Columbia fires started, the impacts remain heavy and are predicted to get worse. For the US, the resulting price hike on lumber is the most significant effect.
This comes at a time when lumber buyers are already in a crunch.
Lumber prices spiked after the Trump administration slapped countervailing duties on Canadian lumber in April and June. While those penalties weren’t as high as expected, summer is a time of peak demand for lumber. The fires are not only diminishing the supply, but resulting in painfully higher lumber prices. BC is the world’s largest exporter of wood and lumber and very much relied on for US lumber supplies.
The fires are both reducing the available wood supply and forcing mills to shut down because of available resources. Mill closures in the wake of the fires have resulted in at least 1.65 billion feet of lumber removed from the market, a number that will continue to grow significantly.
Cost isn’t only influenced by available wood, but also available transportation. Trucks have been significantly delayed because of road closures, and while rail has been impacted less significantly, it has curtailed shipments out of certain areas.
The cost fluctuations continue weekly. Last week, cash prices for some grades of lumber rose 7 percent. On Monday, July 24th, lumber futures by the exchange limit in Chicago rose to the highest in more than two months. Furthermore, lumber for September delivery rose by the $10 trading limit to close at $387.30 per 1,000 board feet on the Chicago Mercantile Exchange. This is the highest closing price for a most-active futures contract since May 8.
One of the industries most significantly impacted by the lumber industry is housing. The median price of a house in the U.S. is at an all-time high of US$263,800 according to the National Association of Realtors. June was the sixth consecutive month of record high increases above the median price a year ago.
Some lumber buyers are looking into alternatives like southern yellow pine, which is less expensive and more available than the softwood lumber coming out of BC. Others are rationing their supplies and limiting their purchases. Depending on the application, some companies are looking into alternative materials, like plastic, to meet their needs until the lumber situation stabilizes.
If you need lumber for pallets, containers, or packages, talk to Packnet about your options. We stay current on all issues pertaining to packaging and shipping. We also offer alternative solutions to wood for these items. Let us help you find the answers you need to continue thriving during this time: 952-944-9124 or [email protected]