Overview : Lumber Prices
Over the last two years, we have seen a constantly changing economic dynamics and distressed markets. The disrupted equilibrium of demand and supply has impacted multiple industries. The lumber industry was visibly affected by skyrocketing prices pinning holes in customers’ pockets.
We are hoping to slowly pace back to our normalcy. However, as history suggests, deep economic crises often leave trailing scars that take time to recover.
The vacuum created between demand and supply can take another couple of months to fill. Recent headlines suggesting the drop-in prices seem to be far from reality, and here is why?
The situation is still volatile, and there are already concerns over an upcoming global economic recession.
Inflation
We are at the highest inflation point in the last three decades.
The current inflation surpasses the highest mark in recent history and is over 7.7% for Canada and 8.6% for the USA. Let’s understand what inflation can do to our economy?
HOW INFLATION EFFECTS :
The current inflation surpasses the highest mark in recent history and is over 7.7% for Canada and 8.6% for the USA. Let’s understand what inflation can do to our economy?
Transportation Costs
• As a result of the shortage, Gas charges have gone significantly up, The increased fuel prices result from inflation and multiple sanctions put on Russia for its invasion of Ukraine.
Currently, the average gas price in Canada is around $2.04/liter. It was around $1.29/liter during the same time, last year.
As a matter of fact, Gasoline Prices in Canada averaged 0.96 USD/Liter from 1992 until 2022,
• Fuel demand continues to increase as people venture outdoors to enjoy warm summer. Thus, the prices are predicted to go up because of the short gas supply.
• There are delays and backlogs with Rail, Marine, and Trucks, forcing lumber and pulp companies to slow down production and exports.
Ultimately, the whole supply chain continues to suffer.
Disbalanced Demand & Supply – After Effects
Sawmills are still unable to keep up with the demand. The industry is troubled by labor shortages. If the increasing housing start data is compared, sawmills’ output is significantly behind.
Other issues not letting the prices stabilize include, ongoing supply chain disruptions and tariffs on Canadian lumber imports.
In our earlier newsletters, we outlined essential aspects of the economic outlook and soaring prices, which you can also read here.
The ongoing media headlines suggest a reference for soft lumber pricing, which seems to stabilize temporarily, but hard lumber corrected pricing is like a distant dream.
There is still a huge shortage going for specialty hardwood species such as White Oak, Walnut Oak, American Poplar, and more.
BRENLO'S Response
We are taking a proactive approach and keeping up with the following measures to make sure our customers are happy.
• We are working hard in preparing ourselves to absorb maximum disruptions across the supply chain, allowing us to pass on only the minimal effects to our clients.
• Despite the ongoing challenges with the supply chain, we are closely working with our suppliers to retain a strong inventory position and ensure our product quality is maintained at each level.
• With our manufacturing capabilities, we are continuing to push back and work on bringing down the lead times and supporting our customers.
We would love to hear back from you.
Please leave your thoughts and comments in the comment section below.
