As mid-January 2021 came upon us, it seemed like supply and demand for softwood lumber and panel products reached an equilibrium. Almost all prices were flat, except the 2x8 sizes which dropped somewhat.
Players agreed that this current lull could indicate a new level of asking prices at lumber producers and wholesalers. Field inventories with buyers were not at such emergency-low levels as they had been during almost all of 2020, but still no one was stocking up on supply as prices remained high compared to historical trends. The busy home building season is fast approaching; both Canadian and US housing starts data remains extremely rosy. Sawmills expect the usual spring rush of orders to arrive soon enough.
Softwood lumber prices seem to have experienced a peak in the first week of January, due to momentum from demand over the holiday break. By the second full working week of 2021 almost all softwood lumber prices were flat.
Demand simmered down in the US Western S-P-F market last week as players compared lumber futures to current asking prices and decided to sit on their hands. Producers remained unworried, maintaining four- to five-week order files at their sawmills and easily selling enough volume each day.
Canadian producers of Western S-P-F lumber were confident that demand would perk back up after the current lumber futures contract expired. Sawmill order files were four or more weeks out.
The supply-demand balance seemed to find an even keel in the second week of 2021, ending January 15, 2021, with benchmark softwood lumber commodity item Western S-P-F KD 2x4 #2&Btr prices staying flat at US$944 mfbm over the previous week, said Madison’s Lumber Reporter. Last week's price is +$292, or +45%, more than it was one month ago when it was $652.
Compared to the price one-year-ago, of US$402 mfbm, last week benchmark softwood lumber item Western S-P-F KD 2x4 #2&Btr was selling for US$944 mfbm which is +$542, or +135% more.
The below table is a comparison of recent highs, in Sept 2020, and current January 2021 benchmark dimension Softwood Lumber 2x4 prices, compared to historical highs of June 2018 and compared to recent lows of September 2015: