With the arrival of mid-April, it seems that the recent practice of customers postponing the purchase of lumber and only buying immediate needs is becoming an ingrained habit.
Historically, the seasonal stockpiling of timber stocks has been well underway at this time of year. However, given the late end of winter and the recent severe weather across the continent, construction activity at the site has been slow. In addition, uncertainty over larger economic conditions, from interest rates to housing starts, continues to keep timber buyers cautious.
The overwhelming sentiment at the moment is hesitation to hoard inventory. Seasoned players warn that this could become a problem if construction activity picks up suddenly, as the supply of timber is very low throughout the supply chain.
Due to extreme volatility and unprecedentedly high prices
In the past, the year-over-year trend in price changes was once again able to provide insight into what is currently happening – if not what will happen this year.
Compared to the same period last year, the benchmark WSPF 2×4 price stabilized at $452 per million barrels and is now up +$102, or +29%.
For the week ending April 12, 2024, Western Spruce-Pine-Fir 2×4 #2 &Btr KD (RL) was priced at $452 per square meter, unchanged from $452 in the previous week.
This week's price is unchanged from $452 a month ago.
Demand has paused as buyers wait to see if prices will fall. Participants reported that a two-tier pricing structure has emerged between sawmills and distributors, as wholesalers with unfavorable contract positions and/or inventory levels are clearly aggressively using their numbers to attract buyers.
Key takeaways:
- Most timber sales continue to lag due to sluggish enquiries.
- A small counter-offer was considered.
- Retailers are buying more; Similarly, large builders have taken advantage of the consistently low prices.
- The total amount of supply circulating in the market is very small.
- Builders needed to replenish their plywood and OSB stocks, so they inadvertently increased their orders.
- The order documents for the stud plant have entered late April.