Susan Yurkovich says while high lumber prices are good for the bottom line in the short term, they don’t stay there…
“We would rather have them be a good level and be sustained, so one of the things we worry about with the very, very, very steep uptick in prices is it’s not sustainable at that level, so like we saw in 2018 for a very brief period of time we had high lumber prices and then they dropped back down.”
Yurkovich says they dropped down to historic lows.
As for why they’re so high, trading at 760 dollars US for two-by-four board of spruce-pine and fir, she says it is a combination of things…
“Thinking about our US market where we, you know it’s our largest market, people have been at home and the demand for do it yourself projects has been higher, so you have this combination where you had a lot of facilities shut down at the early part of COVID and be down for a number of weeks. You had the drying up of supply and now you had demand with people wanting to, you know build a porch or do home improvement, and not a lot of inventory and so we’re seeing this price spike.”
Yurkovich says she expects prices to drop down again once the shelves get re-stocked and there is more demand.
So what is the magic number for industry when it comes to lumber prices ?
“There’s no magic number but it’s not in the 700’s or 600’s, it’s probably somewhere in the 500’s and what we want is to have stability because that’s the best thing for operations. We don’t want to have price spikes and then prices drop back down to historic lows as happened in 2018, that’s not good for families, for workers, or for communities because you have this cycles of feast and famine.”
Yurkovich says they would like to have stable lumber prices that were in the range where industry could earn a reasonable return and keep their facilities operating and keep their employees at work.
She adds that the high prices also don’t change the foundational challenges that they are facing, primarily around high fibre costs.