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Thread: Any chance of construction lumber prices going down in six months?

  1. #16
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    I get some of the industry feeds. Some say things will "stabilize" later this year. Like the spike in prices of coffee, gasoline or Baltic Birch during the previous crises, I would never expect the industry to reduce prices back where they were once they have trained us to pay more. That's just bad business.
    "A hen is only an egg's way of making another egg".


    – Samuel Butler

  2. #17
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    Looks like lumber futures has peaked, and started going down, but trucking prices are still stupid high. Us timber growers are not seeing much benefit, nor are the loggers.

  3. #18
    I think it will stay high. I have a friend that bid a fence job. He couldn't purchase any fencing at any Home Depot in the region and had to go to a different store and paid $.55 per board higher. As the construction industry picks up in the spring, demand goes up; however, the supply is limited and fuel is going crazy due to Biden restrictions. This will drive the lumber prices much higher thru the summer.

  4. Quote Originally Posted by Steve Rozmiarek View Post
    You're kidding yourself if you think a vaccine will make the government get out of the way and let loggers work. I'll bet that diesel prices will be double by the end of summer. Buy the lumber you need now, you won't see it cheaper until the government lets go of this pandemic nonsense, which has a likelihood of nearly 1%.
    This “pandemic nonsense” killed 3 of my close family members. I don’t see it as nonsense.

    Regardless, to the original question, I don’t think you’re likely to see prices drop any time soon. The last few times I’ve been to to a big box store, it seemed like prices for lumber had actually increased by about 10-20%. I scrapped plans for a deck in the short term due to the very limited supply of our local places.

  5. #20
    The deaths are real. The vaccines are working. The messages are changing daily. From a lot of different places ,especially from Fauci.
    Since he’s always smiling ....you have to listen to him to know if news is good or bad. I now wait for the news people to translate and edit.
    I wish Edgar Bergen was around to help him speak.

  6. #21
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    THIS IS A REMINDER....discussion of the pandemic has been banned in this forum site. This is not out of insensitivity to those affected in horrific ways; rather, it's because just like with other prohibited topics, things go off the rails. This thread is about lumber prices and while it's fine to acknowledge that the pandemic is causal, getting into discussing said pandemic beyond that is not going to happen.

  7. #22
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    Going to be high for a while. Most likely end of the construction season before it levels off even a bit. Two by 6" by 8' spruce studs are $9.50 up here presently. Usually in the range of $5.

  8. #23
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    Quote Originally Posted by Rod Wolfy View Post
    ...fuel is going crazy due to Biden restrictions.
    Rod,

    I hadn't heard about this. Can you elaborate? Might affect my plans for the next 9 months...


  9. #24
    I did some reading on this a few weeks ago when I went to buy some 2x4s and had some serious sticker shock. These were the conclusions that I pulled out from various online business and trade publications:
    1. Lumber prices are up by 170% over the last year, which jives with what I thought I remember paying last year versus three weeks ago.
    2. Lumber milling generally wasn't considered an essential economic function during the COVID shutdowns, restricting supply
    3. Lumber mills also deliberately slowed down production. They anticipated an economic slowdown due to the COVID shutdowns and decreased demand. If they were right, and kept at their production levels, there would have been a glut of supply on the market, driving prices down. So they proactively acted to limit supply and keep prices stable.
    4. While the economy did slow down, there was a sector of the economy that was still doing fine. There were workers in those sectors who weren't spending money on going out to restaurants or shows or doing any travel. Those that were now working from home and not commuting also had a lot of time. People with time and money on their hands kicked off a renovation boom, driving demand up instead of down.
    5. One source also cited Pres. Trump's tariffs on Canada as restricting supply. I remember the Canada tariffs being mostly on steel and aluminum production, but if softwood lumber lumber was included in the tariff package, that would have certainly decreased supply.

    So between the restriction in supply and the boom in demand, prices have gone way up. Basic economics. The general message was that mills are ramping up production, but it's not not like flicking a switch - there'll be a lag between the decision to produce more and more stock actually hitting the system. The same article I read on the tariffs says that the housing industry is pushing the Biden administration to reduce tariffs on Canadian softwoods, which would increase supply. Another article talked about housing starts in the US actually decreasing because of the soaring price of lumber, which might decrease demand (things may have changed on that front in the last few weeks, haven't been tracking that). Overall message was that prices would probably stabilize and drop over the next 6-12 months as these supply and demand factors get back to something that looks more like a pre-pandemic state.

    (Take this all with a grain of salt. I'm not in the industry, and this is just the results of me doing some research to satisfy my curiosity, not any in-depth project by a real economist).)

  10. #25
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    Quote Originally Posted by Paul Schaefer View Post
    I did some reading on this a few weeks ago when I went to buy some 2x4s and had some serious sticker shock. These were the conclusions that I pulled out from various online business and trade publications:
    1. Lumber prices are up by 170% over the last year, which jives with what I thought I remember paying last year versus three weeks ago.
    2. Lumber milling generally wasn't considered an essential economic function during the COVID shutdowns, restricting supply
    3. Lumber mills also deliberately slowed down production. They anticipated an economic slowdown due to the COVID shutdowns and decreased demand. If they were right, and kept at their production levels, there would have been a glut of supply on the market, driving prices down. So they proactively acted to limit supply and keep prices stable.
    4. While the economy did slow down, there was a sector of the economy that was still doing fine. There were workers in those sectors who weren't spending money on going out to restaurants or shows or doing any travel. Those that were now working from home and not commuting also had a lot of time. People with time and money on their hands kicked off a renovation boom, driving demand up instead of down.
    5. One source also cited Pres. Trump's tariffs on Canada as restricting supply. I remember the Canada tariffs being mostly on steel and aluminum production, but if softwood lumber lumber was included in the tariff package, that would have certainly decreased supply.

    So between the restriction in supply and the boom in demand, prices have gone way up. Basic economics. The general message was that mills are ramping up production, but it's not not like flicking a switch - there'll be a lag between the decision to produce more and more stock actually hitting the system. The same article I read on the tariffs says that the housing industry is pushing the Biden administration to reduce tariffs on Canadian softwoods, which would increase supply. Another article talked about housing starts in the US actually decreasing because of the soaring price of lumber, which might decrease demand (things may have changed on that front in the last few weeks, haven't been tracking that). Overall message was that prices would probably stabilize and drop over the next 6-12 months as these supply and demand factors get back to something that looks more like a pre-pandemic state.

    (Take this all with a grain of salt. I'm not in the industry, and this is just the results of me doing some research to satisfy my curiosity, not any in-depth project by a real economist).)
    Paul, I agree, but I'd suggest adding stocks availability and fuel costs into the equation as an exacerbating circumstance that will push normalcy out further. That ZIP sheeting I mentioned is sourcing from multiple places to fill my relatively small orders. Equals more exposure to shipping cost increases and small units of materials bouncing all over to fill orders when a wholesaler can't fill from their inventory. Supply fixes that, but I can't see how it's possible within the 6 to 12 months, even if things get back to normal. If it was September, maybe, but not mid March.

  11. #26
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    Thanks Jim.

  12. #27
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    I don’t see how supply will outpace demand to the point where a 2x4 is less than three bucks until we have a major housing crisis or a long term new construction slowdown.

  13. #28
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    Quote Originally Posted by John Goodin View Post
    I don’t see how supply will outpace demand to the point where a 2x4 is less than three bucks until we have a major housing crisis or a long term new construction slowdown.
    The quickest way that could happen would be a massive interest rate hike.

  14. #29
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    I am in the lumber business. I own lumberyards and have been in the business for 38 years. I can tell you that nobody knows. History says lumber prices will go back down. Pricing is high because of supply and demand, as supply increases the price will fall. If demand falls, which is likely, the price will fall. Nobody knows when.

    We expect the rest of the year to be high priced. People ask how can 1400 dollars or 2000 dollars in someone's hands create inflation ? The reality is the recipients are only possessing that money for a very short time. After they get it, who gets it next ? Who gets it after that?

  15. #30
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    Prices rocket up and float down like a feather. I wouldn't count on a significant decrease. Watch the velocity of money. If it picks up and you have a large supply of capitol chasing limited goods, I doubt prices decrease.

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