Lumber prices are at a 10-month high
Jump in housing starts has boosted wood demand
Tom Stundza -- Purchasing, 7/22/2009 2:08:50 PM
Lumber transaction prices are at a 10-month high this month, according to a Purchasing.com survey of buyers. That's partly because of an unexpected boost in demand when housing starts in the U.S. jumped 3.6% for June to 582,000 units.
The Purchasingdata.com lumber price index is 85.0 (100=January 1992) pushed up by such prices as $250/thousand board feet for standard and bright 2x4s hemlock fir in the Pacific Northwest. And, lumber futures for September and November spruce wood on regional commodity exchanges have continued to increase this week. However, the lumber pricing index remains 22% below the cyclical peak in August 2007.
So, while management of West Fraser Timber in Vancouver, British Columbia, agrees there have been some indications of a recovery in the U.S. and Canadian new-housing market, it still will take a general economic recovery for lumber prices to really rebound.
CEO Hank Ketcham says weak sales results so far this year for West Fraser Timber "reflect the continuing very poor economic environment that has significantly reduced home construction in North America." The firm has lumber mills in western Canada and the southern U.S.
Market analysts say mill curtailments, concern over contract talks and a forest fire in British Columbia have provided some support for cash prices this month. Some 6,000 people evacuated because of wildfires near Kelowna, British Columbia, have returned to their homes this week but 5,000 remain evacuated as firefighter continues to try and contain the blaze. Worries continue that unusually dry conditions may result in more wildfires.
See also, Lumber prices may have crashed from 2004 peak.
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