The North American softwood lumber market continued it’s inexorable slide downward toward year-end last week, with prices even further lowered over the week before.
After a wild ride into the stratosphere over the summer of 2018, the supply-demand balance corrected sharply in favour of buyers. Manufacturers of solid wood construction framing materials in Canada and the US last week found themselves plump with inventory — both lumber and logs — while customers have largely covered their needs for whatever building projects remain before the end of the year.
Considerations which had kept prices high for most of this year, specifically terrible ongoing logistics problems on the Canadian railways, are completely resolved. The very robust US home building and remodelling activity over this summer had kept end-users coming back to suppliers with requests for fill-in wood to continue or complete their existing projects. Once that softwood lumber product arrived, customers had no need to order more.
The usual slow-down for North American lumber production is upon us, as US construction activity reduces into winter. The industry adage is “Labour Day is the beginning of the end and US Thanksgiving is the end of the end (for lumber demand).” Even last week sources in the US told Madison’s Lumber Reporter that they might close their offices for the entire week of US Thanksgiving.
For their part, sawmills in Canada has started announcing down-time and curtailments to moderate these falling prices and lessening demand as the year draws to a close.
Interfor, out of Vancouver, BC, plans to cut production by about 20 per cent across its sawmills in the BC Interior as it faces declining lumber prices and higher log costs, the company announced Friday according to the Financial Times. Interfor explained that the scale-back is a temporary measure planned for 4Q 2018. The cuts will be achieved through reduced operating days and extended weekends and holiday breaks spread across its three mills in the Interior.
The pullback comes as Madison’s Lumber Reporter prices for Western softwood have plunged from over US$650 per thousand board feet in June to under US$400 as concerns mount about the U.S. housing market, said Financial Times.