I think it is safe to say that spring has finally sprung. Warmer temperatures usually signal a change in lumber pricing as demand ticks up with every degree. While we are still early in the building season. Below you will find my fill lumber pricing update for April 2015.
Demand plays a role in the price of lumber but other factors such as supply, transportation and exchange rates also play a part in pricing. Since last July the strong U.S. dollar has given Canadian mills a favorable return for shipments of lumber into the United States. Offshore demand has been intermittent and I think many foreign buyers can get better pricing from Russia despite their reported logistical problems. Seasonal rail issues are dissipating and trucking for the moment is benefitting from better fuel costs than last year. All that being said, pricing on lumber this spring is inching downwards.
Why hasn’t pricing moved down faster? Mills are holding pricing while anticipating seasonal demand. A few weeks ago news of a West Fraser/China deal prompted the futures market to bump up a bit but it promptly moved back down when the news didn’t create much of a market run. There is also bottom side protection at these market levels as tariffs are coming into effect; April starting at 5% and then 10% in May. Because of these pending tariffs, I would look for studs and lineal to stay on the softer side over the course of the next few months and there are no major surprises that I can see on the horizon.
OSB pricing also seems to be flat. Ample production has kept enough supply on the market to keep numbers on the low side. Should numbers get much lower the mills will “fix” the pricing problem with curtailment. They claim they can dial back production but at this point I wouldn’t expect it to happen until after any spring needs are fulfilled. Remember though, when OSB pricing is this low there is little downside potential and all upside potential. At this point I don’t think pricing is going up unless the mills start shutting down.
Wider dimensional lumber is also on the soft side but it is much more stable than the narrower offerings. Many engineered substitutes have taken a bite out of the wide dimensional lumber market and like the other lumber offerings, pricing is slowly inching downwards, but it appears to be more stable. Southern Yellow Pine on the other hand is getting a boost from seasonal demand. Many treating plants have jumped into the market to pick up their spring material needs prompting pricing of wider SYP to inch upwards. I would expect pricing on SYP to remain a little more firm into the spring at this point.
As always, we are trying to pick up material that we feel will be of good value to you and that will help you keep your quoted pricing stable for as long as possible. Please let us know if we can help you with any special situations.