Softwood Lumber Prices May 2020 & Canada April and Japan March Housing Starts

The USA purchases approximately 65% of Canadian lumber production, while Canadian buyers account for about 10%, and those in Japan take 6%.
However: US and Canadian customers purchase mostly standard grades (#2&Btr), while Japan buys almost exclusively premium or “appearance” grades (J-grade) which sells for quite a bit more than standard grade does.
It’s true that North American softwood lumber purchasing by China has increased massively since 20 years ago, but it is important to note that a lot of this wood does not go into home building or even construction.
A significant proportion of this lumber is used to make crates, pallets, or packaging, or is remanufactured into other uses (railings, other).
As such, the huge proportion of Canadian and US wood imported into China is low-grade (#3 / Utility) with the requisite lower price of course.

Japan Housing Starts: March 2020 Compared to 2019

According to a report released by the Japan Ministry of Land, Infrastructure, Transport and Tourism on April 30, Japan’s housing starts in March were 70,729 units (down -8% from the same month in the previous year), decreasing for nine consecutive months, said the Japan Lumber Journal May 11.
The seasonally-adjusted annual rate was 905,000 units, an increase of +3.9% from the previous month.

Japan Housing Starts March 2020 compared to full-year 2019 and 2018
Japan Lumber Journal

By construction method, housing starts of 2×4 houses were 8,668 units (down -5%), decreasing for 12 consecutive months, while prefabricated houses were 9,624 units (up +1%), surpassing the previous year’s result for the first time in eight months.
By structure, Japan starts of wooden houses were 40,139 units (down -3%), and non-wooden houses were 30,590 units (down -13%). The ratio of wooden houses by the number of units was 56.8%, almost the same as in the previous month.

Benchmark Softwood Lumber Prices: May 2020

Western Spruce-Pine-FIr KD 2x4 #2&Btr prices MAY 2020

Continuing to make large improvements from the lows of April, for the week ending May 15, 2020, Western SPF 2×4 price jumped +$6, or +2%, compared to the previous week, said Madison’s Lumber Reporter May 19. Prices for this benchmark construction framing dimension softwood lumber item gained a whopping +$44, or +14% from one month ago, when it was US$316 mfbm. Compared to mid-May 2019, this price is up +$28, or +8%.

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

Canada Housing Starts: April 2020

Said Canada Housing and Mortgage Corporation (CMHC) May 8, the trend in housing starts in Canada was 199,589 units in April 2020, down from 204,899 units in March 2020. The federal agency says there was growth in multi-family starts in Ontario, Saskatchewan, and Manitoba in April but Quebec was left out of the monthly national tally because the province’s COVID-19 containment measures were in place until April 20.
Excluding Québec, the trend was 155,995 units in April 2020, up from 153,463 units in March 2020. This trend measure is a six-month moving average of the monthly seasonally adjusted annual rates (SAAR) of housing starts.

US Housing Total Starts April 2020 & Benchmark Softwood Lumber Prices May 2020

WSPF-SYP-ESPF-2x4 Softwood Lumber Prices-2year-Total-US Housing STARTS

Shrewd investors know that construction framing softwood lumber prices are a good leading indicator for US housing activity, including home building and home sales. It is, however US house prices which have the best correlation to the movement and change of wood building materials.
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