Recent Softwood Lumber Price Volatility Settles Down, China Ports “Bursting with Wood”

As delayed data releases out of the US catch up to usual schedule, recent indications out of China show a sizeable drop in log and lumber imports for full-year 2018. Traders report zero ordering and the ports have been choked with wood — some unsold — for at least a month.
Next week the latest data on US home building will be released, by then all the data sets will be on their usual schedules.
Be ahead of these data releases! Don’t delay, this week’s softwood lumber market comment was published to the website Monday morning.

Madison’s Lumber Prices, weekly, are a good forecast indicator of US home builder’s current lumber buying activity ——> DETAILS

SOURCE: Madison’s Lumber Reporter

China Lumber Import Volumes: Full-Year 2018

Official data out of China can often be not an accurate representation of a particular situation. In manufacturing, it is often possible to reasonably validate data with other metrics; for example to correlate official Manufacturing Index trends against energy consumption data. Such comparison for wood products is difficult, because a lot of that material in China goes into other uses than building. So it is difficult to get true figures on lumber consumption, as it is in the US and Canada.
However, all accounts at the China ports is, “Customers won’t even take quotes, ports at bursting with stock.”

Softwood lumber sales quieted down further this week; transportation issues and pockets of bad weather persisted in many key wood-consuming markets. — Madison’s Lumber Reporter

With producers, for sawmills in Canada and the US this was “another digestion week” as sawmills maintained reduced production volumes and stood pat on most of their asking prices. The lion’s share of buyers took a break from the market and waited for delayed loads ordered in weeks previous to arrive.
Now that lumber prices have moderated to a new “normal”, Madison’s decided to look back over the recent past for the lowest level. Print Friday by Madison’s Lumber Reporter on benchmark Western Spruce-Pine-Fir KD 2×4 #2&Btr (wholesaler price, net FOB sawmill) was unchanged from the week before, at US$402 mfbm. This is -5% lower than in mid-February when that price was $422, and a -25% drop from one year ago’s US$540 mfbm.
By comparison, the recent high for WSPF 2x4s, in June 2018, was US$550 mfbm.
The below table is a comparison of recent highs, in June 2018, and current March 2019 benchmark dimension softwood lumber 2×4 prices compared to historical highs of 2004/05 and compared to recent lows of Sept 2015

There was improvement with weather in some important home building markets, but large parts of the US and Canada remained frozen or were sopping from recent rains and snowmelt. Transportation, as usual for the past couple of years and always during this season, was plagued with problems which delayed already late shipments.
Given the robust inventories at both supplier yards and secondary resellers, customer interest in new buying was low. Sawmill order files were quite soft for this time of year.

Producers sat on two week order files and felt no pressure to churn out more lumber, especially in view of the Western Forest Products announcement that their Alberni Pacific Division Sawmill will be shutting down for a full month starting March 18th. — Madison’s Lumber Reporter

As winter draws to a close across North America, there is potential for some big spring storms. Since last week, massive parts of Nebraska are under water and it is expected to be a while before those entire cities dry out. At least one functioning bridge collapsed under the sheer volumes of water, and ice. Rebuilding from these kinds of climate impacts will be just as important as new building this coming US and Canadian construction season.