Capital Economics Predicted Further Decline in Lumber Prices

The lumber prices are still well above historical levels, at almost double from the rate a year before, when the rally commenced.

SEATTLE (Scrap Monster): London-based economic research consultancy Capital Economics predicted further decline in lumber prices as sawmills ramp up production. This is despite projected strong demand for the material.

According to them, the current high lumber prices, though they have fallen from their peak, have resulted in boosted output by lumber mills. The dissipation of labor shortages in the trucking and forestry industry will lead to further surge in domestic lumber production. Incidentally, the rail cars hauling lumber in North America during the month of May 2021 surpassed 7,000 for the first time in more than two years, noted Samuel Burman, assistant commodities economist, Capital Economics.

ALSO READ: Lumber Prices to Go Through Lofty Levels Until 2022

The lumber prices are still well above historical levels, at almost double from the rate a year before, when the rally commenced. The demand is expected to witness slight decline in the near term, despite robust homebuilding demand in the U.S. It predicts that lumber prices are likely to drop to $600 per thousand board feet by the end of the current year.

Meantime, Capital Economics noted that the reduced supplies of resin on account of winter storms during the first quarter of the year have impacted OSB output. The supply shortage in OSB has led to significant rally in prices.

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