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

The cover photo of an emergency food and nutrition strategy prepared for the City of Nanaimo’s health and housing task force. (Maddy Koch photo/City of Nanaimo)
City of Nanaimo will consider the creation of a food policy council

Working group says new arm’s-length body could help with food security in the region

Clockwise from top left: panelist Jacomien van Tonder, moderator Kerry Slavens and panellists Paul Shorthouse and Ross Blackwell discussed the concepts behind the circular economy during a session at the State of the Island Economic Summit on Wednesday. (Vancouver Island Economic Alliance image)
Island economic summit panellists discuss sustainability based on ‘doughnut’ model

Vancouver Island Economic Alliance summit panel examines modern production of goods

An arrest warrant has been issued for Brian Thomas, of Nanaimo, who is accused of throwing a “spear-like object” at a vehicle. (Photo submitted)
Warrant out for Nanaimo man who allegedly threw ‘spear-like object’ at vehicle

Brian Thomas failed to make court appearance, say RCMP

Items seized over four days of targeted vehicle checks Nanaimo and Victoria by members of the Combined Forces Special Enforcement Unit of B.C. (CFSEU-BC photo)
Gang enforcement team seizes drugs and weapons in Nanaimo and Victoria

Combined Forces Special Enforcement Unit of B.C. checked 33 vehicles over four days

Nanaimo RCMP Bike Patrol Unit members ride past Wesley Street on Tuesday morning. (Chris Bush/News Bulletin)
Nanaimo RCMP investigate knife threat, make arrest for alleged drug trafficking

Drugs, cash and knife found in belongings of man who matched description of suspect

Provincial health officer Dr. Bonnie Henry updates the COVID-19 situation, B.C. legislature, Oct. 26, 2020. (B.C. government)
B.C.’s COVID-19 case count jumps by 287, another senior home outbreak

Two more deaths recorded, community outbreak in Okanagan

Commissioner Austin Cullen looks at documents before opening statements at the Cullen Commission of Inquiry into Money Laundering in British Columbia, in Vancouver on February 24, 2020. THE CANADIAN PRESS/Darryl Dyck
RCMP lacked dedicated team to investigate illegal activities at casino, inquiry hears

Hearings for the inquiry are set to continue into next week and the inquiry is expected to wrap up next year

Robert Riley Saunders. (File)
Court approves money for B.C. foster children alleging harm from Kelowna social worker

The maximum combined total award for basic payments and elevated damages for an individual is $250,000

MMFN First Nation has said that it will restrict access to portion of Highway 28 that passes through the Nation’s land until a road use agreement is reached. (Black Press file photo)
Vancouver Island First Nation blocks highway access to logging trucks in Gold River

Mowachaht/Muchalaht First Nation restricting access for Western Forest Products pending road deal

An untitled Emily Carr painting of Finlayson Point was donated to the Art Gallery of Greater Victoria by brothers Ian and Andrew Burchett. The painting had been in their family for several decades. (Courtesy of the Art Gallery of Greater Victoria)
Never-before-seen painting by famed B.C. artist Emily Carr gifted to Victoria gallery

Painting among several donated to Art Gallery of Greater Victoria

100 Mile Conservation officer Joel Kline gingerly holds an injured but very much alive bald eagle after extracting him from a motorist’s minivan. (Photo submitted)
Rescued bald eagle that came to life in B.C. man’s car had lead poisoning

Bird is on medication and recovering in rehab centre

The B.C. Centre for Disease control is telling people to keep an eye out for the poisonous death cap mushroom, which thrives in fall weather conditions. (Paul Kroeger/BCCDC)
Highly poisonous death cap mushroom discovered in Comox

This marks first discovery on Vancouver Island outside Greater Victoria area

Janet Austin, lieutenant governor of B.C., was presented with the first poppy of the Royal Canadian Legion’s 2020 Poppy Campaign on Wednesday. (Kendra Crighton/News Staff)
PHOTOS: B.C. Lieutenant Governor receives first poppy to kick off 2020 campaign

Janet Austin ‘honour and a privileged’ to receive the poppy

Cowichan Search and Rescue set up near the Silver Bridge in Duncan on Wednesday morning, Oct. 28, 2020 to rescue a dog from the Cowichan River. (Citizen file)
Cowichan Search and Rescue save dog from icy Cowichan River

Search and Rescue’s swiftwater team was called in

Most Read