Lumber prices soared to a record price in September across North America. Along with increased demand, Canada also reported a lumber shortage. Black Press file photo

Lumber hitting record-high prices as supply lags behind demand

B.C.’s forest industry hasn’t been able to keep pace with the COVID-19 building boom

A record demand and reduced supplies have pushed the price of 2x4s to historic highs but the B.C. forest industry is only just beginning to fully take advantage.

The industry has been plagued by an acute lumber shortage, which has been a long time in the making.

Lumber prices across North America have nearly tripled since 2019. Based on a weekly price report by the B.C. Ministry of Forests, Lands and Natural Resources, the price of SPF (spruce, pine, fir) 2×4 lumber – as of Sept. 18 – is at $1,288 per thousand board feet, up from a 2019 average annual of $499.

Skyrocketing prices during the past four or five months have upped the cost of building an average single-family home by $10,000 to $20,000, said Brett Giese, president and owner of Crowne Pacific Development Corp. and Veyron Properties Ltd.

“We were first faced with the challenges of price increases and now, despite record high prices the situation has been compounded by a shortage of supply,” said Giese.

Calling the dilemma a “once-in-a-lifetime phenomena” Joel Neuheimer, vice-president of international trade at Forest Products Association of Canada (FPAC) said the high price is because of increased demand after the onset of COVID-19.

Home renovation and remodelling projects that people began during lockdown coincided with construction projects that typically begin in spring. This led to increased demand for lumber across North America, including the United States, where B.C. exports 65 per cent of its lumber.

But the industry was not in a position to take advantage. Baggage from previous years – mill closures and curtailments, wildfires, pine beetle infestations, complex stumpage systems and regulatory policies, and a lengthy strike – had limited B.C.’s fibre supply.

There’s also uncertainty about consistent access to fibre which creates a cost burden for the industry, said Susan Yurkovich, president and CEO of the B.C. Council of Forest Industries (COFI).

“We had a 70 million cubic meter annual allowable cut in the Interior in 2007, that’s about 50 now and expected to go down, just under 40 by 2030,” she said.

There was a lot of downtime through 2019 and 2020 as prices dropped and a lot of lumber was coming off the market as mills were shutting down due to high cost structures, said Yurkovich,

It took a while for production to catch up with the demand, resulting in a lumber shortage between June and August. The shortage fed a 15 per cent drop in B.C.’s lumber export value, costing the industry more than $1 billion. Forest ministry statistics from July 2020 showed B.C.’s export value decreased year-to-date in July 2020 ($6.1 billion) compared to July 2019 ($7.5 billion).

The supply chain was further disrupted when production halted as mills in B.C.were shut for two to three weeks after the onset of the pandemic, creating a backlog on lumber orders.

RELATED: B.C. forest industry facing uncertain future as mills close across province

RELATED: Fewer trees, higher costs blamed for devastating downturn in B.C. forestry

The price of fibre in B.C. is extremely high relative to the rest of the Canada making it a high-cost jurisdiction that typically thrives under market conditions when lumber is expensive.

So, despite the lumber shortage, B.C.’s sawmills welcome the price hike as it helps them sustain their overhead. The real problem is when the lumber price goes low, said Yurkovich.

Come winter, lumber prices might go down, said Neuheimer, adding that construction typically slows then and picks up again during spring.

Yurkovich expects the fundamentals of supply and demand to remain fairly good for a while.

“So we might see a high price environment for a while but it is a commodity, so prices go up and down,” she said.

For more news from Vancouver Island and beyond delivered daily into your inbox, please click here.

forestrysoftwood lumber

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

B.C.’s Court of Appeal is in Vancouver. (File photo: Tom Zytaruk)
Judgment reserved in Surrey Six slayings appeals

Six men were killed in suite 1505 of the Balmoral Tower in Whalley on Oct. 19, 2007

File photo
Hundreds of Canadian chambers support Surrey Board of Trade’s call for pension fix

Up to 12 million Canadian workers don’t have pension plans other than CPP

Tyler Joe Miller. (submitted photo)
Record-setting second hit song for Surrey’s Tyler Joe Miller, who’s ‘stoked for what’s next’

I Would Be Over Me Too song follows Pillow Talkin’ up the country charts

The RCMP photo shows cannabis that was seized as part of the E-Prominent investigation. (RCMP)
Four Langley and Surrey men charged in 2019 pot export case

Warrants were executed on properties in Surrey, Langley and Delta in June and August 2019

FILE – Provincial Health Officer Dr. Bonnie Henry provides the latest update on the COVID-19 pandemic in the province during a press conference in the press theatre at Legislature in Victoria, B.C., on Thursday, October 22, 2020. THE CANADIAN PRESS/Chad Hipolito
B.C. shatters COVID-19 records with 817 weekend cases; masks now expected indoors

Three people have died over the past three reporting periods

Crew transport bus at the Trans Mountain pipeline project work site in Burnaby, March 2020. (Trans Mountain)
Check your workplace COVID-19 safety plans, Dr. Henry urges

Masks in public spaces, distance in lunchrooms for winter

Kelowna City Hall has been vandalized overnight. (Michael Rodriguez - Capital News)
Kelowna City Hall hit by anti-pandemic vandalism

Graffiti condemning the virus appears overnight on City Hall

Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

FILE – A woman smokes a marijuana joint at a “Wake and Bake” legalized marijuana event in Toronto on October 17, 2018. THE CANADIAN PRESS/Christopher Katsarov
Home nurse visits could play big role in reducing cannabis use, smoking in young mothers

The program, dubbed the BC Healthy Connections Project, involves public health nursing home visits

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

The ‘new normal’ for hockey parents in Chilliwack and elsewhere in B.C., watching their kids from outside of the arena due to COVID-19 protocols. (Submitted photo)
Chilliwack hockey parents petition to be let back in the arena

Refused access due to pandemic protocols, parents are now applying pressure to loosen the rules

COVID-19. (Image courtesy CDC)
Christian school in Chilliwack closes for COVID-19 isolation measures, moving to online learning

Mt. Cheam school principal confirms coronavirus exposure led to staffing reduction and need to close

Most Read