Industrial Lumber Update - May 2024
Contributed by Eric Ander, PNW Lumber
All in all, the first 5 months of 2024 have seen more consistency and solid takeaway then we saw in 2023. Business across the US, Mexico and Canada has remained steady, with the brightest spot being the US Midwest. The end of 2023 saw a significant amount of Western SPF Low Grade lumber piling up at the mills. Inconsistent domestic demand and an almost non-existent export market threw the demand and supply equilibrium way out of wack. The narrative for the first half of 2024 has been almost the opposite, increased domestic demand and a revival of the export market, into non traditional markets. In March, 2x4 Economy led the way and briefly touched $400/mbf (Delivered midwest) with 2x6 and wider trading at ~$50-70/mbf discount.
Many manufacturers were forced to try and increase pricing and that was met with mixed results. Some were able to secure modest price increases, but many faced firm opposition. This had led to a bit of a retreat in 2x4 Economy prices, and a bit of a ceiling to prices in 2x6 and wider. We are seeing healthy demand when lumber prices are in the acceptable range for manufacturers to lock in profits. General confidence in future usage and demand is much better than it was in 2023. 2x6 and wider economy and #3 continues to be in short supply, with 7’s, 10’s and 14’s the most scarce items. Flatdeck and dry van availability is plentiful and as a result rates have come down, we are passing along those savings to customers. Cut stock demand is good across the USA, with most running lead times 2-3 weeks.
For now, we lean to more upside than downside in the market, however, Price increases will be limited to what the market can tolerate, if manufacturers are unable to pass price increases down the line. Availability and lead times continue to get pushed out and buyers remain keen to lock up and perceived deals. We’ll see what this summer holds but as we enter another forest fire season and start to see the results of multiple mill curtailments and closures, we could see a tighter market. On the flip side, higher interest rates and a decrease in general construction activity could lead to more #2/Stud on the market which could eventually lead to downward pressure on the low grade market. Time will tell.
All the best,
Eric Ander - (604)-910-1348 [email protected]
Brett Festerling [email protected]
Roberto Gonzalez-Milroy [email protected]
Kevin Keresztes [email protected]
14 WESTERN PALLET