re: Can someone explain lumber prices to me?

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Lumber prices are at previous lows before Covid yet they are at least 30% - 50% more than before. I find myself asking myself this question about a lot of things recently but why?

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Because they can. I’m not as knowledgeable on the softwood market as the hardwood side, but when mills start having inventory piled up with nowhere to go with it the prices will correct themselves. On the domestic hardwood side, many species lately are as cheap as I’ve seen in years. I noticed that looking at the Hardwood Market Report this morning. On the import tropical hardwood side, the industry I’m in, pricing is decreasing some, but the supply side is tight right now still. Thus it’s the supply vs demand issue that’s keeping imported lumber priced high. Foreign governments aren’t offering the mills prime concessions in the best areas to harvest species like Spanish Cedar, Mahogany, Burmese Teak, etc. The container rates have dropped from $25,000 per container to around $3,000. That certainly helps. The Ukraine Russian war is causing us a lot of problems. Russia was supplying most of Europe with their oil. When they cut Russia off Europe had huge energy problems. Fuel has been diverted from areas like Ghana, Ivory Coast, Congo, etc to Europe so they didn’t freeze to death this winter. African sawmills are low on fuel thus they have very little to give to logging trucks, chainsaws, and something to fuel their dry kilns. Tough to haul lumber to the port with no fuel. Throw in the fact that tropical lumber must be logged around a rainy season which greatly reduces your time to get timber out of the forest. Europe effects the lumber market in this country to, but not many people realize this. Both Europe and China buy a lot of exported domestic lumber from this country. A lot of what is produced goes over there because they will pay more for it. With interest rates climbing home construction should take a dip and pricing will correct itself quickly. Softwood mills have no problem selling something below cost while a market corrects itself. I will say this and it’s a very important observation to keep in mind. We are selling as much dollar wise as pre Covid years yet only buying and doing half the work. The worm will turn and when it does it might get ugly. Within the last 2 months I’ve seen a lot of customers that have been running wide open since 2012 are starting to slow down.

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Because too many idiots are paying the inflated prices. Tell them you will wait for prices to get better. Who would reduce their price if they sell out at higher prices? Let them know that you as the customer aren’t buying because price exceeds your budget. It will then come down.

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Yep, definitely better to just go out of business than pay the inflated prices right?