July 11, Lumber News
SYP All widths in SYP have officially hit their bottom prices as 2x12x20 was the only dimension that took a decrease thi...
Welcome to another look at the lumber markets!
When I try to imagine a life without trees my mind goes blank because it’s hard for me to imagine such a thing. As I reflected on the many industries that directly involve lumber or trees that I have been involved with I came up with quite a list, giving a sampling of the hundreds of industries that rely on this commodity. I built outdoor playsets for a time, biking 18 miles a day to and from work (talk about going green and reducing emissions!). I worked at a lumber yard for several years, doing everything from running a forklift to making deliveries. I worked for a mini-barn company building simple but high-quality storage barns, and also in the construction field I worked for pole-barn builders raising various sizes of pole buildings. I also spent some time in a cabinet shop, working for and with my brother in law building custom cabinets. I’ve gotten my feet wet cutting Hedge fence posts for a logging/fence post operation and I worked in tree service for a time, trimming and removing trees and grinding stumps. All of these occupations/trades directly involved lumber or trees but involved very different forms of interaction with it and represent a wide array of industries.
The playsets we built used top-grade treated lumber, mostly pre-routed. Our target market was the high-end customer that wanted a high level of aesthetic appeal and I remember spending much time with a pneumatic orbital sander trying to remove the many ink stamps on the lumber. I really enjoyed my time at the lumber yard, which gave me a good working knowledge of the retail lumber industry. I learned that Southern Yellow Pine is 30% stronger than Spruce, Pine, Fir even though it is often cheaper. Building mini-barns helped me see that storage barn sales follow the seasons, and of course I learned how to work with tongue & groove OSB and other materials. Pole barn construction, while less exacting in some respects than cabinet building, is certainly exacting on the back and knees! Learning how to manage the bowing and warping characteristics of SYP is part of building with it successfully. I enjoyed the level of precision required in the cabinet shop and learned about various grades of plywood and how to assemble face frames. Hedge post logging is not on my list of favorites! Hedge trees tangle and since they tend to grow in groves you can hardly make them come down! The wood is beautiful and very hard. The saying is that a hedge post will outlast three post holes! Tree service was probably my favorite. I learned a lot about trees and the characteristics of the different types.
With over half of 2025 now behind us, we thought it would be a good time to write a review of what has happened in the lumber world this year; especially with there being no shortage of topics to cover. From tariffs being implemented and postponed multiple times on imported lumber, trucking shortages across the country, major lumber mills closing their doors, and OSB selling at a 5-year low price, let’s take a quick look back:
January and February seemed to be filled with optimism in the lumber world as many traders were expecting a healthy increase in lumber usage in America with newly elected President Donald Trump stepping into office. With the new president came many promises made during Trump’s campaigning leading up to and following his election that would directly affect the lumber market. These included many “red-tape” type regulations for building permits to be dismissed so that builders could begin building processes quicker and with less expenses; and, what turned out to be most impactful, tariffs on imported items including lumber. To spare us all another reading on lumber tariffs we will not elaborate any more in this article. (See our previous articles of this year). But, before we move on, we will remind you of the anti-dumping duties that will be placed on Canadian lumber later this fall. The exact percentage and date of these duties has yet to be decided.
Many mills have had less optimism this year, especially those in Canada. Prices on SPF spiked $50 overnight after the last (short-lived) tariff that was implemented the first week of March and then postponed just a few days later. This then led to a spring-long decrease in prices in both SPF dimensional lumber and OSB. SPF prices took a decrease every week through the rest of March, April, and May; but June came bringing the first small increases to the dimensional lumber. OSB followed the same pattern but with even deeper cuts; and in May, prices were down lower than they had been in 5 years with your average 7/16” grade A sheet trading at around $9.50 a sheet.
The weakened OSB market eventually led to one of the largest lumber producers (Groupe Remabec’s manufacturing division: Arbec Forest Products) in Canada to temporarily lay off over 1,000 of its’ employees. The company’s main blame was the weakened international trading due to tariffs along with the anti-dumping duties to come that could increase the current 14.4% duty to 34% later this year.
Although finding great deals on truckloads of lumber was relatively easy this Spring, getting a truck to pick it up was not. It is estimated that truck driver shortages may reach a historic high of 80,000 drivers. Multiple factors including proof of vaccination requirements for the US- Canada border, a shortage of railcar supplies, and executive orders from the Whitehouse for it to be mandatory that a truck driver be proficient in speaking English, are all creating what most are calling a “trucking nightmare” across the country.
As we have already discussed OSB and SPF market trends, let’s now take a look at Southern Yellow Pine. When looking across all dimensions, on average SYP spent all of February to the end of April increasing under $5 each week. However, when looking at specific dimensions, some increased much more than others. For example, 2x4s and 2x10s increased $100 mbf each from February to May while 2x6s and 2x8s and 2x12s had hardly any change and remained steady. May did finally come with increases, and prices across all dimensions fell much quicker than they had gone up. Most all dimensions dropped around $100 mbf just from mid-May to mid-June. Prices seemed to hit their floor around the beginning of July as deals became tougher to find with each week that passed.
Low grade lumber (#3 and #4) was able to maintain its increases each week later into the year with prices increasing every week from December of 2024 into mid- April of 2025. A sudden drop in prices did come in these grades as well in May and many buyers capitalized on great deals in June to stock up for the summer.
The pallet market overall is rather slow as of July but in some areas could be described as steady. Custom pallet shops making special sizes are in particular staying busy, as that is a niche the larger shops cannot fill. Two factors negatively impacting new pallet sales are 1) an overall slow economy and 2) the fact that lots of recycled pallets are filling the market, competing against the new pallet market. Several shops that we spoke with recently expressed less than ideal optimism about the future of this market. There was a burst of new pallet sales earlier because pallets were needed for products that were being shipped in large quantities to beat the tariffs. But the rush is over and we are now in the inevitable slump that has followed.
The eastern US experienced a very wet spring, with reports coming in from various sawmills that log supply is very low and inventory is decreasing. This causes some speculation of a possible shortage of pallet hardwood lumber in the near future. A drier summer will help loggers to get logs out of the woods and to the sawmills of course, so this could change. A positive note is that pallet grade SYP really dropped in price after an upswing, making Southern Yellow Pine more affordable again.
Over the past years this product has kept hardwood sawmills afloat because nothing else has been performing as well. So the good news is that prices have been holding steady, and that steady cross tie demand is carrying the mills through challenging times. Since the market is holding steady, many logs are being used for ties and that’s why tie inventory is at record highs. So since there are plenty on hand, the demand has slackened somewhat. Railroad infrastructure companies purchased 20% less in the first quarter of this year as compared to the first quarter of last year. This certainly raises some questions about the future of the market.
The large buyers recognize that if they cut back on their purchasing too drastically it would severely hurt the hardwood sawmills since they are in a fragile situation with the current trends, so they are trying to continue purchasing as much as they can to insure that they will have a solid supplier base in the future.
Prices have come up a bit March through May. Several categories of hardwood consumption have shifted in demand from slow to fair and/or steady. This would include items like cabinets, residential flooring, truck trailer flooring, and board road, which is heavy equipment mats used by utility companies and heavy construction companies. The demand in these categories has picked up slightly in the first half of this year from slow to fair and/or steady, with prices increasing as well.
On the flip side there has been very low levels of production, raising the question whether demand is actually increasing due to other economic factors or whether it is simply due to the lower production level (which could also be driving prices and demand).
Of interest is the fact that May of this year recorded the lowest hardwood production level since 1959, when hardwood lumber production began being tracked. That comes out to about 333 1/3 million board feet of lumber produced in May. At that rate the annual production (assuming it remained the same) would be at 4 billion board feet, the lowest figure recorded in the last 66 years.
Interest rates and inflation continue to negatively impact the housing sector. Inflation is slowing but people’s wallets are still recovering from a rapid period of inflation over the last two years. When we compare this year over last year we see that new house starts dropped by 12% comparing April of this year with April of 2024. Home builders are less confident about building because of the current slump affected by high interest rates coupled with higher prices due to inflation. The first five months of 2025 has seen less new homes built than the first five months of 2024.
Thankfully though, on a positive note, the repair/remodeling sector is still holding steady with $350 billion a year being spent in this market.
