Lumber price outlook positive despite historically wide price spreads

Trends remained mixed in framing lumber markets, although roles were often reversed.

Southern Pine, which had been the laggard in recent weeks, took on a firmer tone. Meanwhile, Canadian and West Coast species languished amid moribund demand.

In Southern Pine, a growing number of mills extended order files into or even beyond scheduled holiday curtailments, and urgency to alleviate buildups eased as a result. Discounts moderated or dissipated altogether in many items that had previously declined for several weeks. Mills firmed quotes, especially in the middle widths, after clearing floor stock in early trading.

SYP was substituted more frequently for Spruce as buyers took advantage of the historically wide price spread between species that spanned triple digits in some items. Traders noted that the SYP’s unusually steep discount to Spruce surfaced weeks ago. However, the industry appears to take longer to react to such trends compared to past years.

Traders noted that companies are more careful to ensure the shift in species meets span ratings and other design specifications before jumping on the lower prices. Trading of Western S-P-F was thin as buyers lacked urgency and sensed further downside in the market.

Many cited the spread with Southern Pine as giving them pause. Producers lowered quotes and listened to counters but sold selectively. The spread in reported prices was immense.

A weakening lumber futures board further sapped energy from the physical market. The January contract dripped lower each day week to date. Total estimated volumes were relatively strong. In Coast markets, trading ground to a near-halt as a confluence of factors caused the market to stagnate.

Outlooks for 1Q 2025 were mostly positive, but the potential for tariffs, concerns about inflation, and interest rate uncertainty loomed large and tempered expectations.

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