Random Lengths North American framing lumber composite reverses two-week decline with US$10 gain in week ending Feb. 8 to US$397/mbf, futures support higher prices with four days of limit-up gains
February 11, 2013
(Industry Intelligence Inc.)
– The Random Lengths North American framing lumber composite jumped US$10 in the week ending Feb. 8 to $397 per thousand board ft. (mbf), after falling in the previous two weeks from a Jan. 18 peak of $400/mbf.
Compared to the price at this time last year of $286/mbf, the composite is $111 (38.81%) higher.
The four-week average used to determine the March rate for export duties under the Softwood Lumber Agreement has now reached a record $395/mbf, Random Lengths noted, securing a third straight month of tax-free exports to the U.S. for Canadian shippers.
Sales were strong from the start of last week and continued to accelerate, reported Random Lengths, allowing mills to rebuild order files and increase quotes. Prices found further support from futures, which posted limit-up $10 gains on four trading days from Jan. 31.
An increase in exports to China is a key driver in recent lumber futures increases, due partly to record log prices there, according to RBC Capital Markets analyst Paul Quinn. Lumber futures prices are up 44% from this time last year, and may keep rising, he said in an interview with Bloomberg, adding: “China’s back in.”
On Feb. 5, Lumber futures for March delivery jumped by the CME’s $10 daily limit for the third time in four sessions, rising 2.7% to close at $379/mbf – taking prices up 11% since Jan. 30, the biggest four-session rally since December 2011. On Feb. 6, both the March and May contracts closed limit-up, with March at $389/mbf and May at $388.80/mbf.
After a dip in all months on Thursday which saw March settle $6.20 lower at $382.80/mbf, futures prices moved higher again on Friday, but in smaller increments of up to $5. March futures closed on Friday at a six-week high, up $5 from Thursday at $387.80/mbf, while May settled up $3.30 at $387.60/mbf.
In Western SPF marketrs, trading was brisk until Wednesday before demand cooled from Thursday, lifting random #2&Btr prices by $2-18. In addition to support from futures, demand from secondaries in the U.S. drove price increases as distribution yards and office wholesalers replenished their inventories, reported Random Lengths.
The reported price of KD Western SPF #2&Btr 2x4 random gained $18 (4.97%) to finish the week at $380/mbf – up $115 (43.40%) from the price reported a year ago of $265/mbf.
In Eastern SPF markets, mills reported solid sales to the U.S. but a more mixed picture north of the border, Random Lengths reported. Most mills built order files until the end of the month and increased prices accordingly, and some raised quotes to Canadian customers based on prices for sales to the U.S.; but some mills in the Northeast missed out on the pick-up in demand.
The reported price of KD Eastern SPF (delivered Great Lakes) #1&2 2x4 random climbed $13 (2.80%) to $464/mbf, and was $117 (32.50%) higher than the price a year ago of $360/mbf.
Southern pine prices gained after a two-week downturn, on a surge of orders that took many traders by surprise. Prices of all widths increased, with a rally on the Westside that some compared to activity after post-Hurricane Katrina, reported Random Lengths. Sales of #2 2x4 lagged gains in other widths, although prices gained slightly or recovered midweek losses.
The reported price of KD Southern Pine (Westside) #2 2x4 Random, which dropped $11 in the week ending Feb. 1, ended last week up $1 (0.22%) at $453/mbf – a gain of $147 (48.04%) over the year-ago price of $306/mbf.
Douglas fir mills reported a surge in sales activity, with one major telling Random Lengths it had experienced its highest volume sales week for three years. Some producers pulled off the market after booking order files into March, often citing high log costs as a constraint to increasing production.
The reported price of Green Douglas fir (Portland Rate) Std&Btr 2x4 jumped $19 (5.54%) to a reported $362/mbf – up $127 (54.04%) from the reported at this time last year of $235/mbf.