Don't expect soaring lumber prices to drop anytime soon, builders association says

Lumber prices in B.C. and the rest of Canada are surging and industry experts warn that it could be years before the numbers go down to pre-pandemic levels.

According to the latest provincial data, prices have gone up threefold when compared to previous annual averages.

As of March 12, a basic SPF (spruce, pine, fir) two-by-four cost $1,040 per thousand board feet, while the annual average in 2019 was $372, according to the Ministry of Forests, Lands, Natural Resource Operations and Rural Development's weekly forest product price tracking.

"Unfortunately, we do expect the lumber prices to stay quite elevated for quite a period of time," said Kevin Lee, CEO of the Canadian Home Builders' Association.

"Everybody is hopeful through the second half of the year we'll begin to see things come back down. But it will probably be a couple of years before lumber comes down anywhere near where it was before the pandemic," he added.

Lee says the surging prices were driven by an uptick in demand during the second half of 2020, which saw an increase in home purchases and renovations. The red hot market has carried over into 2021, already surpassing industry expectations.

"Low interest rates have helped keep people interested in buying homes," Lee said. 

Mills operating at capacity

Mills have been playing catch up after many went offline during the onset of the pandemic, Lee said. They're currently operating near 100 per cent capacity, he added.

But the same can't be said for mills in the U.S., which have been slower to get back on their feet.

That means Canadian producers are trying to meet demand from both sides of the border.

"It's a North America lumber market," Lee said, "and lumber has had a tough time keeping up."

On Wednesday, B.C. Premier John Horgan said he was alarmed by the numbers, noting that they aren't necessarily indicators of a rebound for the province's slumping forest sector.

"We have to acknowledge that these prices aren't forever," Horgan said. 

"It's understandable that these businesses that have had tough times want to take advantage of the good times."

Horgan said the keys to long-term sustainability in provincial forestry is the resolution of the softwood lumber dispute, along with making better use of second-growth woods.

"At the end of the day, we need a sustainable industry," he said.