Personal Finance

Will British Columbia Wildfires Drive Wood Prices Up Again?

Wholesale lumber prices have plummeted since their mind-boggling peak in May. Now, however, wildfires in British Columbia and the northwestern US are fueling concern of a possible rebound.

Traders bid on lumber futures after Canfor Corp., one of North America’s largest lumber producers, said Wednesday it was reducing production capacity at its Canadian sawmills as a result of extreme fire conditions. forestry in western Canada. At the end of Thursday’s trading day, a contract for 1,000 board feet of lumber for September delivery was priced at $ 647, more than $ 100 from its closing price on Tuesday.

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Wildfires in western Canada lead Canfor to reduce sawmill production

Vancouver-based Canfor said it was reducing production because wildfires are significantly affecting its ability to transport product to market. Amid the rail damage and supply chain delays that are causing the fires in the province, some analysts hope other sawmills will follow suit.

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But there are other factors beyond the fires that could put pressure on wholesale timber prices again, says Kéta Kosman, editor of Madison Wood Reporter.

Lumber prices skyrocketed as sawmills, which had cut production just after the COVID-19 health emergency began, scrambled to meet demand from home builders and renovators amid the pandemic property boom.

READ MORE: BC declares a provincial state of emergency due to forest fires

In May, prices reached an all-time high of more than $ 1,600 per 1,000 board feet, up from around $ 400 per 1,000 board feet in February 2020.

Since then, however, they have experienced a steep decline as sawmills were finally able to increase supply and high prices began to cause some customers to postpone their purchases.

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“Production was finally able to catch up … and demand is still strong, but now we are beginning to strike a balance,” says Kosman.

The question is whether the pandemic lumber price roller coaster is now on again.

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While sawmills are well supplied with logs at the moment, home-building activity remains strong in the US, accounting for 65 percent of Canadian lumber exports, Kosman notes.

Kosman sees another potential source of price pressures in the violent storms that hit the East Coast.

READ MORE: BC 2021 Wildfire Map: Location and Size of Fires Burning Around the Province

The storm season, moving forward two months in the southern and eastern U.S., is increasing demand for plywood, first to cover windows and then to rebuild roofs, Kosman says.

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If you’re wondering what this means for your backyard deck renovation or DIY renovation project, the answer is likely very little for now, according to Kosman.

Anecdotal evidence suggests that the wood prices consumers are paying at home improvement stores still reflect the previous high in wholesale prices, Kosman says. Consumers put off by high prices may want to check again in a couple of months, he adds.

Still, given that US home construction is likely to remain elevated for a while, lumber prices are unlikely to return to their pre-pandemic lows, Kosman warns.

“Don’t expect that anymore.”

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