{"id":1339,"date":"2021-06-29T15:21:09","date_gmt":"2021-06-29T13:21:09","guid":{"rendered":"https:\/\/www.evergreenholdings.co\/?p=1339"},"modified":"2022-08-04T10:06:19","modified_gmt":"2022-08-04T10:06:19","slug":"sky-high-timber-prices-summer","status":"publish","type":"post","link":"https:\/\/dendotron.co.za\/index.php\/2021\/06\/29\/sky-high-timber-prices-summer\/","title":{"rendered":"Sky high timber prices are expected in this summer’s construction season"},"content":{"rendered":"\t\t
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Sky high timber prices are expected in this summer's construction season <\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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With behaviour changing as a result of the COVID-19 pandemic, the price of timber began a steady rise. Whether this was the result of higher demand or market speculation is the topic of some debate.<\/b><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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From an article originally published by ENR<\/a><\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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When Uri Sasson phones in a lumber order for the apartment building his company is constructing in Nyack, N.Y., he is often hit with another jarring price shift.<\/span><\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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\u201cEvery time I call for delivery the numbers change,\u201d he says. A decline in April provided small comfort considering what\u2019s happened to the overall lumber prices in the last 18 months during work on Sasson\u2019s 33-unit Gateway Lofts<\/a> apartment building. When you are in the middle of construction, he says, “you really can\u2019t stop.\u201d<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Rising timber prices are impacting bottom lines across the supply chain<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Booming house and apartment construction<\/a> are one economic signature of the pandemic, but lumber\u2019s price surge is causing homebuilders and contractors a market-wide case of agita. Sasson\u2019s development company performs its own construction and he declined to say how much unexpected lumber increases have added to the cost of his long-planned rental project.\u00a0<\/p>

To explain what’s happening with wood,<\/a> economists and market analysts cite imbalance of supply and demand, production cuts at sawmills when prices were lower, trouble ramping up production and shipping woes due to COVID-19.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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There are several measures. According to Bloomberg and Wells Fargo, a generic lumber price that was around $600 per 1,000 board-ft in early 2018, has nearly tripled to $1,645 as of May.<\/span><\/p>

A Commodity Lumber Price index calculated by Contract Lumber, a distributor in the Midwest and Southeast, hovered around $950 per thousand board ft\u2014more than three times the company\u2019s annual composite index of $300 in 2019. The average through March, in the words of company blogger Don Dyson, was \u201can absurd $888 per thousand board feet\u2014and likely to climb.\u201d<\/p>

According to ENR\u2019s recent cost data, it still is climbing. As of May, plywood is up 89.5% year over year. Overall, lumber prices are up 88.6% in the same period.<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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\"Pick up your lumber before it's gone\"<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Supply shortages at the retail level seem to be everywhere.<\/a><\/p>

New Jersey builder Mark Seligsohn knows the frustration of telling a client there will be a wait for a multi-family home to be completed. The owner of Selco Builders in Margate, he searches for his lumber anywhere he can at the South Jersey shore and picks it up himself at the lumber yard.<\/p>

\u201cI want to get it before someone else buys it,\u201d Seligsohn said recently as he lifted wood planks into the back of his truck.<\/p>

On a recent 90\u00b0 day, Seligsohn drove his pickup truck from a jobsite in Margate inland to Pleasantville to pick up 20 sheets of drywall and plywood as well as two dozen 2×4 and 2×8 boards.<\/p>

\u201cPeople talk that we the builders are making more money but that\u2019s not so,\u201d says Seligsohn. \u201cIt\u2019s making it hard for us to finish a house and we make the same even though we pay more for the lumber.\u201d<\/span>\u00a0<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Key products nearly double in price<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Commonly used products, such as pine 2x4s (S4S), and 5\/8-in.-thick plywood, are both up close to 90% in the past year, according to ENR cost data. The 2x4s are at $1,207 per thousand board-ft while the plywood hit $1,173 per thousand sq ft.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t

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Those types of numbers have set off alarms at the Associated General Contractors and National Association of Home Builders. NAHB says lumber price increases have added $35,000 to the price of an average new single-family home. AGC says lumber prices have nearly tripled since last spring. Although the associations urge Congress and the White House to ease tariffs on Canadian lumber, the Biden administration recently proposed doubling them on many Canadian softwood lumbers. AGC also wants the Biden administration to urge domestic lumber producers to ramp up production.<\/span><\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Why lumber is getting more expensive<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Seligsohn said he had finished a construction project recently using \u00be-in, AdvanTech for subflooring. It cost $24 a sheet last year, he said, but now is up to $64.<\/p>

Demand is outstripping supply, Seligsohn said. \u201cIt\u2019s not a manufactured shortage.\u201d<\/span><\/p>

Ben Peter, president of Peter Lumber in Pleasantville, N.J., also cites supply and demand and blames labor shortages at lumber mills. As a result, his daily routine with core customers has him \u201con the phone letting them know what is going on as far as prices.\u201d<\/span><\/p>

\u201cWe just anticipated after the pandemic, this would fall off and prices would go back to normal,” he said. “But it hasn\u2019t and I don\u2019t know when it will.\u201d<\/span><\/p>

James Kirby, president of Commercial Construction Consulting in Boston and a construction price expert, believes that a shortage of delivery drivers to truck the lumber from fabricators to dealers is a factor. \u201cTrucking right now is the big problem,\u201d he said. \u201cEverything in the supply chain is not back to where it was before the pandemic.\u201d<\/span><\/p>

Others see darker forces at work.<\/span><\/p>

In a lawsuit filed in federal court in Jackson Miss., three state homebuilders\u2014David B. Turner Builders, New England Construction and Timber Craft Homes\u2014are taking aim at the lumber industry\u2019s 10 largest supply companies, claiming they have conspired to raise prices.<\/p>

The builders make their case around what they contend is highly unusual pricing behavior they discovered after finding prices last November suddenly tripled. They say they went around to dealers and to Lowe’s and Home Depot stores in the Jackson area to determine what was going on, but they found no explanation.<\/span><\/p>

But that month, oriented-strand wafer board had shot up from $8 per sheet to $38.50, and 2x4x12 pine board, recently $7, was now $15.<\/p>

Only a coordinated market manipulation in violation of antitrust laws could explain it, the lawsuit states.<\/p>

\u201cDefendant likely had to confirm with each other in some capacity because each of these Defendants prices grew at least 10 times the typical cost at the SAME TIME,\u201d the contractors claim.<\/span><\/p>

Without citing more specific evidence, the contractors allege the price hikes were the result of a concerted action by defendants and \u201cthat there had to be stock already sitting in the possession of each and every one of these defendants.\u201d<\/span><\/p>

The lawsuit names 10 companies as defendants, including Georgia-Pacific and Hampton Affiliates. Spokespersons for both companies declined to comment on the lawsuit.<\/span><\/p>

Kirby, however, said market manipulation is unlikely and traces the current price spike origins to before the pandemic. He sees the increases continuing until an expected leveling occurs by year’s end as the supply chains and other market conditions return to normal.<\/span><\/p>

But Kyle Little, chief operating officer at Sherwood Lumber, a New York-based wholesale distributor and former lumber trader, was not so sanguine. \u201cOur belief is that this cycle that we\u2019re currently in … is here for the foreseeable future,\u201d he said in an interview broadcast on CNBC.<\/p>

That promises to make life complicated for Sasson and his Nyack, N.Y., project. Because its seismic requirements and \u201celaborate design\u201d and amenities, Sasson has had to order more engineered wood products than usual\u2014including laminated veneer lumber, engineered truss joists and structural plywood. And according to Sasson, \u201cengineered lumber is a lot more expensive.\u201d<\/span><\/p>

Contract Lumber\u2019s Don Dyson writes that \u201clike other things in life,\u201d lumber pricing is more complex, with each specialty product subject to a pricing dynamic of its own that includes raw material costs, delivery, demand and location.<\/p>

Back at the Gateway Lofts jobsite in Nyack, Sasson\u2019s project manager was keeping an eye one recent afternoon on carpenters framing another level of the building.<\/span><\/p>

Sitting in the driver’s seat of his SUV, the project manager punched the office number into his smartphone, told Sasson\u2019s son that a reporter was interested in talking to them about lumber prices. The project manager ended the call with a request for laminated strand lumber, an engineered, composite product used in wall studs, trusses and other building components because of its strength.<\/p>

\u201cWe need more LSL,\u201d he said.<\/p>

Sasson, who heads Sasson Real Estate Group, has been developing and building north of New York City for 40 years. He is buoyant about prospects for his Nyack apartment project, a special amenity-filled residence with unusually spacious units. He hopes to finish by early spring.<\/p>

On the subject of LSL, however, Sasson turned a bit glum. He has had more than the usual headaches ordering plywood and wall studs, the main problem, of yellow pine or laminated strand lumber: \u201cLSL we have to get on special order. It takes forever.\u201d<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t

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Originally published by ENR<\/h2><\/a><\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t
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A leading exporter of timber since 1987<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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Evergreen Holdings<\/a> is a diversified company specialising in each step of the timber value chain from forestry to logistics. We deliver logs, chip and other raw materials from a range of species to end users on five continents.\u00a0<\/p>

Speak to one of our specialists today.<\/a> We simplify and expedite.\u00a0<\/p>\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t

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GET IN TOUCH<\/h2>\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t
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