Selective Cuttings

Lumber hits $400/thousand board feet (MBF)

January 25, 2013

The Random Length Framing Lumber Composite Price reached 400 US$/MBF the week of January 18 2013. The last time lumber fetched such a high price was in April 2005 and the US was experiencing a housing boom, with single-family housing starts above 1,600,000 per year (see figure). US single-family housing starts are currently at 616,000, almost a million less than April 2005!

US housing starts and framing lumber composite price

This line graph shows increasing lumber prices since 2011 to levels not seen since April 2005. Although at that point US single housing starts were very high (above 1,600,000 starts per year), they are currently still relatively low (616,000 starts per year).
Sources: US Census Bureau and Random Length

Prices this high have attracted the first tentative explorations of European producers.  Although the evidence is so far anecdotal, it seems as though at least one shipment from the EU has been made to the U.S. East Coast.  Analysts indicate that prices of $450 would be needed to attract any type of sustained volume, and at over $475 EU producers would look to become significant suppliers. If US demand recovers as expected, prompting further lumber price increases, there is a chance this could happen for sustained periods over the medium term.