The wild price ride experienced by the nation’s lumber industry last year is not expected to be repeated for the duration of this year, say experts.
In fact, statistics indicate that the overall picture has now stabilized.
“After climbing 0.5 percent in March, prices paid for softwood lumber decreased 1.4 percent over the prior month,” the latest Producer Price Index just released by the Bureau of Labor Statistics reports.
The report additionally notes that “while the PPI for softwood lumber has fallen 12.6 percent over the last 12 months, 95 percent of that decline occurred in 2018.”
Lumber prices exploded in the spring of 2018 in response to both new home construction and existing home renovations.
The price of lumber, in fact, hit a historic high then at $659 per 1,000 board feet, surpassing previous recorded peaks of $500 in 2017 and $493 in 1993.
But then came the fall, with prices late last year dropping to $300 per 1,000 board feet.
Says Andrew Hecht, a commodities expert, in the website Seeking Alpha: “The fear of higher interest rates caused a slowdown in new home construction that resulted in a decline in demand for the wood that is an essential building block for infrastructure.”
Earlier this year, the price climbed back to just over $450.
Experts are now predicting a price stabilization and slight increase for the rest of the year heading into 2020.
“Longer term, the stable U.S. housing market, both new starts and remodeling driven by resales, remains a key driver of lumber sales prices,” notes the website Market Watch.
That publication also predicts that “high-yield pulp prices are expected to remain solid, albeit lower, for the remainder of 2019,” with a global market demand for pulp expected to remain above historic levels.
By Garry Boulard
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