May 2, 2025 Lumber News
SYP The SYP lumber market is finally showing signs of softening for the first week this Spring. Although the average for...
Have you ever considered how fundamentally important lumber is to our lives? We use Lumber to frame our houses, we walk on hardwood floors, eat our meals off a wooden table while sitting on a wooden chair, and store our dishes in hardwood cupboards. We walk through wooden doorways, relax on our living room furniture built from lumber. Before retiring for the night on our bed supported by a wooden frame, and many of us fill up our wood stoves to keep our houses warm for the night. We often frame our barns, shops and businesses using lumber. And many of the products we use on a daily basis are transported on rail cars supported by hardwood railroad ties underneath the train tracks! Truly God has given us a wonderfully versatile and useful resource in this land!
There are also many of you who provide for your families by working with lumber whether you are a logger, work at a sawmill, furniture shop, pallet shop, or lumber yard.
Since we also work with lumber everyday we have found the lumber markets and all the factors that affect each category quite interesting . In this series we invite you to join us as we share our notes on the current lumber market as we see it from our area of the globe.
Within a few days of Trump’s election, it became obvious that the wholesale SPF (Spruce Pine Fir) market was moving upwards in price. There have been quite a few large SPF Mills in Canada who have closed down over the last years. There is also a possibility that the Trump Administration will increase the tariffs on lumber coming from Canadian and European sources. Those factors along with a slight uptick in some regions in the housing market make some of our contacts feel that the spruce market might remain on its upward trend for a little while. Most find that 2X6 SPF lumber is especially tight in supply.
A friend of ours who has been buying and selling lumber for 43 years shared with us recently that, in the past, western Canada had excellent quality lumber but over the last number of years the lumber shipping out of western Canada tends to be a bit poorer quality then Eastern Canadian stock. He observed that the quality timber supply in western Canada is becoming much less plentiful which leads to more mills closing in that region. Timber regrowth in Canada is much slower because of the colder climate.
Because of the abundant lumber supply in the southern USA there have been quite a few new mills built in the last several years. The increased production capacity (such as one new mill that can produce 450 million board feet per year) coupled with mediocre demand over the last year has resulted in many SYP (Southern Yellow Pine) mills selling lumber below cost for quite a few months. With the new production capacity that has come online since COVID it seems unlikely that we will see SYP reaching the same post COVID high prices. Immediately following the election however, SYP prices climbed above the break-even point for the sawmills. Many of the contacts that we have spoken with expect SYP will remain steady to slightly higher over the next number of months as more construction projects begin.
An interesting thing I learned recently was that the newer mills that are being built in the south produce much less #4 lumber than the older mills because of the better equipment they are installing. This likely will mean that #4 SYP will become increasingly difficult to source and more low grade users (pallets, etc.) will need to shift to using number three and better.
So far this year, less OSB has been produced per month than last year. Production has been increasing, particularly in the last few months, although demand has been increasing even faster. OSB pricing had been at its lowest for the year during June through September but it has been steadily moving upwards because of short supply. Plywood has been following the same trend and it seems that may continue if the housing market picks up pace.
As many pallet manufacturers already know, demand has been mediocre at best for many shops for the last one and a half years. A friend of ours, whose pallet company ships 100-130 truckloads per week of recycled and new pallets, shared that one factor that seems to especially affect the 48 x 40 demand is that during the post COVID bubble many manufacturers were making products and putting them on pallets in their warehouses. After demand for finished goods decreased and interest rates increased many companies wanted to reduce their inventory. This both reduced the demand for new pallets to put product on because they were selling product from their warehouses and also released a lot of used pallets into the recycled pallet market. Some pallet customers who had always used new pallets switched to buying recycled pallets because of the cost savings. New pallet manufacturers in many areas have competed on very thin margins in order to have enough of orders to keep their crew occupied. Quite a few large pallet shops have been working a 4-day week because of slower demand. At the same time there have been pallet shops who have remained steadily busy depending on who their customers are. Pallet shops that supply special sized pallets have tended to stay significantly busier although there has been increased competition on price.
One thing that we have been noticing is the increasing use of KDHT (Kiln-Dried Heat-Treated) pine pallet stock instead of hardwood and other lumber types. There definitely are advantages to KDHT pine such as not needing to heat treat the pallet because the lumber has already been heat treated. Also KDHT pine can be sourced from farther away because trucking is less costly as it weighs less per board foot. Another reason some shops prefer it is because generally there is less of waste when processing KDHT lumber instead of hardwood cants. In a pallet business, cost is always an important factor so there are many pallet shops that will switch between hardwood and KDHT pine depending on which is more cost effective.
Like many others we use both hardwood and KDHT pine at our mill. We have been seeing reasonably steady pricing so far in hardwood lumber and moderate increases in pine as well as tighter supply. Hardwood cant price tends to vary quite a bit by region but we are hearing numbers in the $400/mbf (thousand board feet) to $525/mbf range across the country with the average around $470/mbf. With as many hardwood mills as have shut down this past year we would not be surprised if we would see some significant hardwood lumber price increases in the next 6 months if pallet demand picks up.
Railroad ties have been one of the few hardwood items that have been performing reasonably well over the last two years since the hardwood grade market slowed down. From what we are hearing there are many sawmills who would have been forced to close in the last year and a half if there had not been decent demand for cross ties. In recent months it seems that some treating plants have slowed a bit in their purchasing and prices have softened a little in some regions. Some feel though that there will continue to be steady demand or maybe even better in 2025 for cross ties based on the forecasted purchases by the treating plants.
Over the past one and a half years since hardwood grade lumber has dropped in price one of the interesting things that I have learned is how much market share the wood look alike products have been taking from genuine hardwood. It seems that especially when interest rates are high and housing is less affordable homeowners are definitely leaning towards the cheaper wood look-alike products. There have been several efforts made by some in the hardwood industry to improve their marketing message to potential customers by sharing the long-term benefits of building with genuine hardwood floors, cabinets, etc.
The overall production from hardwood sawmills is at a historic low since demand has been down for many of the hardwood products. There are of course, some species and grades that are in much higher demand than others such as white oak. But overall there are currently no categories of hardwood lumber that most hardwood sawmills would consider to be performing well. Pallet cants and cross ties, as we noticed earlier, are steady but all other classes have been slow or quite slow.
A few people that we have talked to recently have noticed a bit of an uptick in new housing construction. That may expand to more regions although many home buyers currently are not able to afford purchasing a home right now with the interest rates though. Average price in the USA for a new home is around $400,000 to $450,000. It is interesting that even though the short term interest rates are being lowered slowly by the Federal Reserve, the mortgage rates have climbed up a little again following a dip in September.
We look forward to exploring more lumber related news and information with you next month!
