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Home›Swap›Lumber prices drop as U.S. consumers swap DIY for exit

Lumber prices drop as U.S. consumers swap DIY for exit

By Allen Rodriquez
June 21, 2021
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As American consumers venture out again, lumber prices return to the ground.

Wood prices have fallen sharply from astronomical highs in recent weeks as homeowners shifted spending from building decks and replacing flooring to outlets for eating, drinking and shopping after the relaxation of Covid-19 rules in the United States.

Lumber prices fell 48 percent to $ 875 per thousand board feet from a high of $ 1,686 in early May, reflecting a sharper-than-expected decline in renovation projects.

“As the economy has reopened, people are doing less around their homes,” said Chris McIver, senior vice president of marketing and business development at West Fraser, the world’s largest lumber producer. of work in the world. “It was enough to push the prices in the other direction which were too high and unsustainable.”

But Kevin Mason, managing director of ERA Forest Products Research, said media reporting the spike in prices had pushed Americans to halt buying lumber and halt their DIY projects, which they said. still intend to perform while homework continues beyond the pandemic. “It’s more of a postponement of demand than of destruction,” he said.

Lumber has been the focal point of the ongoing U.S. economy debate: whether price increases fade as supply chains return to normal or inflation persists with growing demand. increase due to monetary and fiscal policies.

Falling prices have given some economists greater confidence that a surge in inflation will soon pass. Still, prices remain well above the previous high of $ 651 per thousand board feet in 2018, and about three times the historical price average.

“People want to think of lumber as this inflationary measure – we’ve retreated but we’re still a monstrous number above our average price point,” said Greg Kuta, president of broker Westline Capital Strategies. “From an inflationary point of view, it always cries out for pressure. . . The inflation genie is out and you are not going to master it again.

Despite the slowdown in costs, lumber brokers have expected high prices for years. This is mainly due to strong demand for new homes after decades of under-construction and falling mortgage rates during the pandemic that unlocked a generation of millennial property buyers.

To meet this demand, sawmills can steadily increase supply, but any rapid increase in capacity is difficult, analysts added. In addition to supply constraints for equipment and outsourcing, forest regions face particular challenges ranging from labor shortages in the southern United States to the aftermath of a mountain pine beetle outbreak. beetle in British Columbia.



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