North American softwood lumber production decreased 4.2% y/y in September – Both countries saw y/y declines with production down 9.1% y/y in Canada and down 1.0% y/y in the US. Sequentially, US production was down 2.2% m/m due to a 3.8% m/m decline in the US South and a 2.3% m/m decline in US Other, which was partially offset by a 0.2% m/m increase in the US West. In Canada, production was up 4.4% m/m due to a 4.6% m/m increase East of the Rockies (-6.3% y/y) and a 3.9% m/m increase in British Columbia (-13.5% y/y).
Operating rates increased in both the United States and Canada – According to the WWPA, US operating rates increased 2 percentage points m/m to 81% while the Canadian operating rate was up 7 percentage points m/m to 78%. In the US South, operating rates were flat m/m at 84%, while operating rates in the US West increased by 3 percentage points m/m to 77%. The BC operating rate increased by 6 percentage points m/m to 71% while East of the Rockies, the operating rate increased by 7 percentage points m/m to 83%.
North American softwood lumber consumption declined 3.2% y/y in September – A 5.5% y/y decline in US softwood lumber consumption (or ~243 million board feet) more than offset a 12.7% y/y increase in Canadian softwood lumber consumption (or ~82 million board feet) leaving September North American consumption down 161 million board feet y/y. The y/y decline in US lumber consumption was likely attributable to the slowdown in repair & remodel activity, which by home center accounts started to rebound post Labor Day. By end-market, we believe that new residential construction will continue to show strong y/y growth, which is supported by strong US housing fundamentals.
US softwood lumber imports declined 5.5% m/m – US imports of Canadian lumber were down 1.6% m/m and down 16.7% vs. September 2020. Non-Canadian imports fell 24.0% m/m (or by ~55 million board feet) to 174 million board feet, which is still up 7.0% vs. September 2020. The m/m decline in Non-Canadian imports was driven by a 32.7% m/m decline in European imports and a 6.3% m/m decline in imports from Latin America.
US log exports increased 0.5% m/m – According to the WWPA, US softwood log exports were up 0.5% m/m to 158 mmfbm, with an 8.3% m/m decline in exports to China more than offset by an 80.3% m/m increase in exports to Japan and a 17.2% m/m increase in shipments to Canada.
Midweek pricing update – According to Random Lengths (“RL”), the Framing Lumber Composite increased $58 vs. last Thursday to $731 driven by strength across all framing lumber markets. Although transportation delays in British Columbia have loosened somewhat, there are still extended order backlogs which have resulted in shortages across the supply chain. Western SPF 2×4 #2&btr pricing was up $55 w/w to $800 as producers are aggressively raising quotes (ranging from $750-900/mfbm). In SYP, 2×4 #2&btr was up $60 w/w to $835 in western markets as buyers scrambled for coverage amidst rapidly dwindling supplies.