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

Four staff members at the Okanagan Men’s Centre have tested positive for COVID-19 since Oct. 23, 2020. (Adult and Teen Challenge OMC photo)
Four positive COVID-19 cases at Okanagan Men’s Centre

Those affected are staff and have been in isolation since Oct. 23

While there is no Halloween event at the fairgrounds this year, the town is still planning fireworks for Oct. 30. File photo.
Oooooh….Awwwww….get ready for Halloween fireworks

Look up and to the north, Friday Oct. 30 at 7:30 p.m.

test tube with the blood test is on the table next to the documents. Positive test for coronavirus covid-19. The concept of fighting a dangerous Chinese disease.
Interior Health records third COVID-19 death

A new community outbreak was reported at Okanagan Men’s Centre in Lake Country

Decorate, dress up and eat candy. But consider staying home. Black Press photo
EDITORIAL: Think about staying home this Halloween

Like everything in 2020, it has to be different

A woman wears a face mask and plastic gloves while browsing books as a sticker on the floor indicates a one-way direction of travel between shelves of books at the Vancouver Public Library’s central branch, after it and four other branches reopened with limited services, in Vancouver, on Tuesday, July 14, 2020. (THE CANADIAN PRESS/Darryl Dyck)
B.C. reports 234 new COVID cases, 1 death of senior who had attended small birthday party

Roughly 5,700 people are isolating due to being exposed to a confirmed case

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

Superintendent of the Kelowna RCMP, Kara Triance. (Capital News file)
Non-violent crime, small population contributes to Kelowna’s crime rate spike, says RCMP

Kelowna RCMP is assuring the public the city is a safe place

RCMP. (Phil McLachlan - Black Press Media)
Crime up 31 per cent in Vernon in 2019: Statistics Canada

Increase includes a 45 per cent rise in violent Criminal Code violations

A Tuesday Oct. 27, 2020 apartment fire in Penticton killed two and displaced dozens more. (Brennan Phillips - Western News)
Fatal Penticton apartment fire deemed accidental

The blaze gutted an apartment building on Tuesday morning, killing two people and displacing dozens

A nurse performs a test on a patient at a drive-in COVID-19 clinic in Montreal, on Wednesday, October 21, 2020. THE CANADIAN PRESS/Paul Chiasson
Interior Health reports seven more COVID-19 cases

Eighty-nine cases remain active, none of whom are currently hospitalized

Burnaby RCMP responded to a dine-and-dash suspect who fell through a ceiling in March 2020. (RCMP handout)
VIDEO: Suspected dine-and-dasher falls through ceiling of Burnaby restaurant

A woman believed to be dashing on her restaurant bill fell through the kitchen ceiling

This Photoshopped version of the crosswalks near the entrance to the Salmon Arm Arts Centre on Hudson Avenue show what is proposed to help create safety for and show inclusivity to the LGBTQ2S+ community. (Salmon Arm Arts Centre image)
Tri-rainbow crosswalk and Progress flag requested to help make Salmon Arm safe

Council will consider budget requests to help make city inclusive to LBGTQ2S+ community

A can of Canada Dry Ginger Ale is shown in Toronto on Thursday Oct. 29, 2020. The maker of Canada Dry Ginger Ale has agreed to pay over $200,000 to settle a class-action lawsuit launched by a B.C. man who alleged he was misled by marketing suggesting the soda had medicinal benefits. THE CANADIAN PRESS/Joseph O’Connal
B.C. man’s lawsuit over marketing of Canada Dry ginger ale settled for $200K

Soda’s maker, Canada Dry Mott’s Inc., denied the allegations and any liability

Most Read