Timber prices began to soar in the middle of 2021 and fell to the normal level in the latter ten days. However, with the arrival of 2022, the reality of controlling the rise of timber prices may not be much improved.
From any perspective, 2021 is not a typical year for wood prices. Between supply chain shortages, inflation, the exploding real estate market and record timber prices, many people look forward to saying goodbye to the turbulent 2021. But will 2022 be better?
At least in terms of timber prices, the answer does not seem entirely promising. Various experts, including those who have connections with the wood industry or rely on wood supply, predict that high prices will remain unchanged for the foreseeable future.
Richard Fung, a custom home builder at forever homes, said: "timber prices are expected to increase next year. If this high price fluctuation continues, prices may more than triple by 25 years." "At present, the price of wood per board foot is $1024.30. It is expected that the price will be as high as $1516.96 per board foot next year."
Here are some issues affecting the wood market and how consumers can prepare for the coming year.
Heavy rains and floods in Canada have a great impact
Although the vast majority of timber supply in North America comes from the United States, about 14% of timber is supported by imports from British Columbia, Canada. For timber operators, British Columbia was severely affected by floods and rainfall earlier this year, which is bad news for the timber industry in the region.
The floods damaged highways and railway lines, which in turn affected the transportation of wood and pulp. British Columbia forestry officials said at the end of November that weekly timber shipments fell 30%. More importantly, pulp shipments to Vancouver's main export locations average less than 20% of the normal level.
"The United States imported more than $5 billion worth of timber from Canada, accounting for about 83% of imported timber. Local production is under great pressure due to the lack of access to these stocks," said Alex Williams, chief financial officer and certified financial planner of findthisbest. "Unless the problems of supply shortage and rising demand are solved, prices are likely to remain rising until 2022."
Todd Morgan, director of forestry research at the University of Montana's Bureau of business and economic research, pointed out that rainfall and floods are only the latest challenges for British Columbia's timber industry and the province's transportation of timber to the United States.
In the past 10 years or more, British Columbia timber has also been affected by the mountain pine beetle epidemic. By 2020, the region has destroyed the province's 15 year log supply. Pine beetles are the result of global warming. Scientists say they have not encountered cold winter in recent years, so they have been bred in large numbers.
"BC Province (British Columbia for short) has been challenged by the mountain pine beetle outbreak for many years and is still in the disaster, resulting in a shortage of log supply," Morgan said.
Wildfires in the western United States
In the context of deteriorating climate change, mountain pine beetle is not the only problem facing the wood industry. The past year also provides a vivid example of the significant increase in extreme weather conditions such as wildfires, which is also caused by the changing global temperature of the earth, let alone the reduction of rainfall. Fires ravaged some of the most important timber producing areas in North America, putting greater pressure on the timber industry.
"Wildfire activity in states such as California and Oregon over the past few years has affected the number of logs entering sawmills, especially Oregon, an important softwood producer in North America," Morgan said.
Labor shortage
In 2021, due to the epidemic, the shortage of labor force also swept across North America, and the wood industry was inevitably affected. Due to the lack of sawing, transportation and other workers, sawmills have encountered difficulties in production. This has led to serious fluctuations in timber prices, as many sawmills cannot produce enough supply as they once did.
"Manufacturers are trying to improve the productivity of sawmills, but they basically encounter the problem of labor shortage. The factories have interrupted production due to the outbreak of the epidemic, and it is difficult to find new employees," said carpenter Robert Johnson, a well-known local carpenter and the founder of woodworking website and enterprise sawiery.
"There is also a shortage of managers in the wood industry, and it is more difficult to recruit workers because factories are usually located in sparsely populated areas," Johnson said.
Transportation costs and truck transportation disruption
This year, the cost of wood transportation has also become more expensive, not only due to the rising cost of fuel, but also due to the shortage of drivers. The truck transportation industry has been trying to find and has to raise wages, so that these pressures are fed back to the price of wood.
"At home, truck transportation is definitely a challenge, which will affect some businessmen who drag logs from the forest to the sawmill and then transport wood from the factory to home depot or elsewhere," Morgan said.
"At home, truck transportation is definitely a challenge, which will affect some businessmen who drag logs from the forest to the sawmill and then transport wood from the factory to home depot or elsewhere," Morgan said.
Future timber prices
Despite these challenges, timber prices have fallen a lot from record highs in the middle of the year. But in the third quarter, it began to pick up again. Experts predict that the timber price in the first half of 2022 is likely to be much higher than now.
"The price of timber futures traded on the Chicago Mercantile Exchange from March to May of 22 years is about $1200 per board foot, which is 30% higher than now, indicating that traders expect timber prices to rise," Morgan said. "Spring and summer are usually busy seasons for house construction, maintenance and renovation, which will increase seasonal demand and push up prices."
A letter from the National Association of Home Builders (NAHB) to the president in October also expressed concern about the sharp rise in prices in the spring of 2022. With the US tariff on timber from Canada rising to 17.9%, this is not a good thing for us timber traders.
Experts recommend talking to contractors early to ensure pricing. Alternatively, purchase North American materials in advance.
"If consumers are planning long-term projects, they should seek to pre order wood in bulk," said Scott rubzin, CEO of Tiffany property investments LLC
DIY people may also consider using alternative materials for construction and renovation projects. Options may include engineered wood, recycled wood, or metal. You can also shop around and find recycled wood stores in your area to save the cost of DIY projects.
"For DIY people, now put the bill of materials together and try some comparative shopping, remember that spring and summer may be busier and more expensive," Morgan said. "If the demand for building materials rises as last year and earlier this year, producers may still face supply shortages, which may lead to higher timber prices in the hands of consumers."
