Lumber Market Prices Plummet: Economic Conditions, Decreased Demand, and Oversupply Drive Down Prices by 38% and 12% for Western S-P-F and Southern Yellow Pine
Economic uncertainty and decreased demand for housing and renovations are driving the price drop.
Lumber market prices have plummeted by 38% for Western S-P-F and 12% for Southern Yellow Pine.
Sales of panels remain sluggish compared to dimension and studs in the solid wood commodity trading industry.
The Southern Yellow Pine East Side 2x4 #2&Btr KD (RL) price dropped by $10, or 3%, from the previous week and is down $50, or 12%, compared to the same week last year.
The Western S-P-F 2x4 #2&Btr KD (RL) price is down $1 from the previous week and $175, or 38%, compared to the same week last year.
In recent years, the lumber market has experienced significant fluctuations, with lumber prices reaching record highs in 2021 and subsequently plummeting in 2024. This drop in prices can be attributed to a combination of factors including uncertain economic conditions and decreased demand for housing and renovations. The prevailing sentiment within the solid wood commodity trading industry has been negative, with sales of panels remaining sluggish compared to dimension and studs. In the week ending June 14, both Western S-P-F 2x4 #2&Btr KD (RL) and Southern Yellow Pine East Side 2x4 #2&Btr KD (RL) experienced price drops compared to the previous week. The Western S-P-F 2x4 #2&Btr KD (RL) price is down $1 from the previous week and $175, or 38%, compared to the same week last year. The Southern Yellow Pine East Side 2x4 #2&Btr KD (RL) price dropped by $10, or 3%, from the previous week and is down $50, or 12%, compared to the same week last year. These drops represent a significant decrease in value when compared to two years ago, with prices down $276 and $325 for Western S-P-F 2x4 #2&Btr KD (RL) and Southern Yellow Pine East Side 2x4 #2&Btr KD (RL), respectively. The lumber market has also been affected by weather, with excess capacity in both lumber and panel manufacturing leading to decreased demand. Southern yellow pine has seen less volatility than spruce or Douglas fir/Hem fir and is priced more affordably. Experts predict that the current trends of decreased demand for housing and renovations will continue in the coming months, with the Producer Price Index and the Fed's recent pivot to possibly only one rate reduction for 2024 influencing market decisions. In addition to economic factors, environmental, political, and logistical factors have also played a role in shaping the lumber market. The oversupply of wood-based building materials has led to decreased demand for lumber and a subsequent drop in prices. This has been further exacerbated by the record drop in U.S. housing affordability, with single-family housing starts decreasing, leading to less demand for lumber. The home renovation market, which helped lift lumber prices during the pandemic, is also showing signs of weakness.
U.S. housing affordability is at its lowest level since before the Global Financial Crisis.
Demand for new homes and renovations has remained subdued due to high home prices and mortgage rates.
Single-family housing starts have also decreased, leading to less demand for lumber.
The home renovation market, which helped lift lumber prices during the pandemic, is showing signs of weakness.
Accuracy
Lumber prices have plummeted 75% from their May 2021 record high to roughly pre-pandemic levels.
The price of Western S-P-F 2x4 #2&Btr KD (RL) was down $6 or 2% compared to the same week last year.
Lumber and panel prices dropped in Q2 which is typically a busy period.
Deception
(30%)
The article makes editorializing statements and uses emotional manipulation by describing the lumber market situation as an 'ugly scenario' and a 'classic bullwhip'. The author also engages in selective reporting by focusing on the negative aspects of the lumber market without mentioning any potential positive developments.
Skanska is turning to mass timber, green steel, and low-carbon cement to decarbonise construction.
The US market for wood-based building materials remains sluggish due to expected Fed Reserve rate cuts failing to materialize.
Accuracy
American construction costs have returned to pre-pandemic levels with lumber prices continuing to bounce around the market.
Lumber prices have plummeted 75% from their May 2021 record high to roughly pre-pandemic levels.
Deception
(100%)
None Found At Time Of
Publication
Fallacies
(90%)
The article contains an appeal to authority fallacy when it states 'According to Skansa, one of the world’s largest construction companies,' and 'Speaking at Data Center World, Priyal Chheda, Sustainability lead for Corgan.' These statements are meant to lend credibility to the information being presented without providing any evidence or reasoning as to why Skansa or Priyal Chheda's opinions should be trusted. However, since there are no other fallacies found and the appeal to authority fallacies do not significantly impact the overall argument of the article, I am scoring it a 90.
According to Skansa, one of the world’s largest construction companies,
