Another boom in the price of lumber

Quebecers will have to resolve to pay more for their construction lumber, even when the coronavirus pandemic will be nothing but a bad memory.

“We are at a turning point. In the forest industry and construction, there was a pre-COVID and there will be a post-COVID, ”says Michel Vincent, director of the Economics and Markets Department of the Quebec Forest Industry Council (CIFQ) .

The benchmark tool for the price of lumber is the Pribec index. It brings together around twenty materials of different dimensions and is expressed in board feet (PMP).

“It has now recovered to $ 860 at the time of year when prices are normally at their lowest. The situation is worrying. We see that something is happening, ”says Vincent.

He points out “that in the United States, single-family construction has been at its best for over 15 years”, which is creating a very strong demand. And since, on average, a single-family home requires three times as much wood as a unit in a multi-dwelling, the quantities of wood required are even greater. The phenomenon is happening here too.

“It makes a big difference. There is a craze [au Québec] for single-family homes because people think they can be built in the second or third urban ring because of teleworking, ”analyzes the director of the CIFQ.

The renovation

The sanitary measures also caused a stronger demand in the renovation. “The money that we put in travel, in restaurants, we put in the kitchen, the terrace, the shed,” says Vincent.

Psychological factors also play in the increase in the price of wood, he judges.

“As soon as there is a disruption in demand, there is a bit of panic. People [de la construction] want to make sure they have the necessary wood, buy more and a bit of a frenzy sets in. This is what we saw in the toilet paper at Costco this spring. They are the ones who created the shortage, ”he says.

If the demand is so strong, why has the supply not increased? The limits of forestry capacity and the labor shortage in the region partly explain it, says Vincent. But there is also that adding a production line requires three to six months.

“Manufacturers believed that prices would fall again during this time. It will probably generate investments to make more wood with the same labor. There are upheavals coming across the forestry sector, ”he says.

The future

The director of the CIFQ does not come forward to predict the price of wood next spring. But the situation could prompt countries like Sweden and Germany to export timber here. “It can make a big difference,” he believes, increasing supply and preventing prices from reaching too high a peak.

STILL ON THE RISE

The Pribec index *

• Before the pandemic: 525 $**
• At the top in the summer: 1200 $
• In November: 750 $
• Currently: 860 $

The price of new housing has jumped 7,2 % in October 2020 compared to October 2019.

* benchmark of a basket of about twenty wood materials

** Price for 1000 board feet (PMP) Source: APCHQ