03/13/2021
As we head into nicer weather, please be aware that lumber prices are on the rise again! Supply will likely be an issue again as well.
WHY DID THE PRICE OF LUMBER SPIKE IN 2020?
2020 lumber prices started the year quite reasonable.
When COVID-19 hit in Jan/Feb, confidence in the building materials sector decreased. There was a ton of uncertainty that started to creep into the minds of purchasers around the country.
By March, when the real impacts of COVID-19 starting to be known, any confidence that was left, quickly evaporated. Many dealers in the country reduced or canceled orders which reduced the amount of lumber in market at the retail level.
March/April mills were forced into lockdown with the restrictions that were implemented. Production of lumber ground to a halt.
April/May Canadians got used to media stories, and figured out quickly that any holidays and other disposable income spending was going to be non-existent. Plus, they were laid off from work, or working from home - which meant they now had plenty of time to tackle those home reno projects they had been putting off.
Nearly overnight, the industry went from expecting a MAJOR decline in spending, to a 30% increase (compared to the year prior) almost overnight.
When mills were finally able to open again, they were only allowed to do so at reduced capacity. But by now, the backlog of orders was through the roof. The supply chain was empty.
Mills pumped things out as fast as they could, but the demand continued to surge.
Freight costs surged mid-season as well as the amount of goods being moved in Canada backlogged the trucking industry. Costs of freight increasing means anything being transported also increases.
Mills were never able to catch up in 2020. The demand remained incredibly high deep into winter, and even stronger in the USA.
The supply chain remained empty through the winter of 2020-2021. Distribution never got a chance to re-stock it's typical inventory.
To read the full article go to
www.tuds.ca/blogs/tudsblog