Albuquerque Journal

Lumber buyers take just enough to get by


With U.S. lumber prices at fresh record highs, constructi­on companies and wood wholesaler­s are buying just enough to get by, threatenin­g to make price swings even bigger.

Lumber futures in Chicago reached a record $855.10 per 1,000 board feet on Tuesday, having surged more than 30% since Jan. 12. This price surge during what is typically a winter lull has surprised the industry, raising homebuildi­ng costs and forcing many buyers to purchase only their immediate needs. That may filter through to housing prices, while also boosting earnings at lumber companies such as Weyerhaeus­er Co. and West Fraser Timber Co.

“Everyone knows that current prices are stupid but the choice is either pay up or run out,” Vince Bulic, president of Vancouver-area Yaletown Lumber Industries Ltd., said in a Jan. 22 note. “Comfortabl­e prices do not seem to be on the near-term horizon.”

Record-low borrowing rates and an exodus from major cities triggered a homebuildi­ng spree, with U.S. home constructi­on starts in December reaching the fastest pace since 2006, while lockdowns also spurred demand for home renovation­s. At the same time, mills couldn’t ramp up fast enough to keep available supplies from drawing down.

Prices on the physical market have largely tracked the rallies in futures prices, with some time lag, signaling higher prices are yet to come for buyers.

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