Lumber Prices to Retreat in the Near Term as Mills Come Back Online

SEATTLE (Scrap Monster): The brokers and traders expect lumber prices to retreat in the near term, as mills come back online following return of economic activity to normal. However, the prices are not expected to return to pre-pandemic levels. The likely chances are for lumber prices to fall nearly 45%$ from current levels to settle around $500-$600 per thousand board feet.

The lumber prices have almost doubled from summer lows. The lumber futures hit $930 per thousand board feet- the highest level in almost six months. Even after posting 21% weekly gains, they are significantly below their record highs of $1,711 per thousand board feet recorded during May this year.

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According to analyst, several factors contributed to the recent spike in lumber prices. The main cause is the severe flooding in British Columbia, which hampered operations of West Fraser Timber. The shipments were affected due to transportation disruptions and limited access to ports.

The shortage of materials was further exacerbated by hoarding by certain construction companies. The trade dispute and the subsequent decision by the U.S. to double duty on softwood lumber imports from Canada also contributed to the spike. Another major trigger behind lumber price rally was the hot housing market.