Benchmark lumber prices jump to a record US$1,000 despite slowdown in sales volumes

Homebuyers and renovators hoping for a mid-winter price slump are instead being greeted with new all-time record high prices for lumber and oriented strandboard (OSB) building panels.

CIBC analyst Hamir Patel says Western SPF (spruce, pine, fir) lumber prices rose to a four-digit close for the first time on Feb. 16, reaching US$1,000 per thousand board feet, according to market watcher Random Lengths.

In a report, he says the North American composite lumber price rose about one per cent to an all-time high of US$979, despite lower sales due to the seasonal construction slowdown and the affect of extreme cold weather in Canada and the U.S. on sawmills and shipping.

Meanwhile, he says, the price of benchmark North Central region OSB panels increased by 1.2 per cent from Feb. 12 to a record US$845 per thousand square feet, while OSB pricing in Western Canada improved by the same amount to an all-time high of US$870.

In a report on Feb. 16, RBC analyst Paul Quinn said North American softwood lumber production increased by 7.2 per cent in November versus the same month in 2019 but consumption rose by 14.8 per cent.

Citing Western Wood Products Association statistics, he said production jumped by 8.2 per cent to about 2.9 billion board feet in the U.S. while Canadian production increased 5.9 per cent to about two billion.

“We expect that producers were running their mills near capacity as they attempted to take advantage of extremely strong pricing levels,” he said, adding demand has not fallen off in early 2021.

“We are now re-entering the spring building season where demand tends to peak. Buyers are covering their immediate needs while building up their inventories; however, producers are facing tight conditions with order files booked through March.”