- The lumber price roller coaster continued for Eastern Spruce/Fir as market participants are attempting to balance low inventories, tight lumber supplies and continued stronger-than-anticipated new home construction and remodeling demand. Despite a 30-day decline in prices that bottomed at $600/MBF in October, East Coast random length Spruce/Fir 2x4 prices climbed back to $1,000/MBF by mid-December. Demand is anticipated to stay strong throughout 2021, as a result of housing stocks that have been underbuilt since the 2008 financial crisis and low long-term interest rates.
- Eastern White Pine markets have remained solid with less volatility than Spruce/Fir. Demand for the species has continued to be good and has not wavered with mills able to move sufficient inventory.
- Despite some recent price improvement in a few species, due to robust remodeling, hardwood markets continue to struggle, impacted by declines in both domestic and international demand, as well as the emergence of new, high-quality substitute engineered wood products. We continue to view this segment of the lumber market as the most challenged from a profit standpoint and expect that many hardwood mills will struggle with profitability in 2021. Over the long term, we expect supply to continue to rationalize with forecasted demand.
- After an initial slump in housing starts due to COVID-19 in April starts have grown steadily back to pre-pandemic levels on a seasonally adjusted basis and are forecasted to be robust in 2021.
Pulp and Paper
- There is little change in overall pulp and paper markets, with free sheet, super calendar and newsprint remaining under pressure and declining, while tissue, container board and packaging have been returning positive margins.
- Despite good demand for SPF logs, it was a difficult 2020 for many logging contractors as a result of the loss of an important low-grade market in Jay, Maine (Pixelle plant), reduced capacity of a few other low-grade markets and the Nine Dragons mill in Old Town, Maine not meeting its previously communicated production targets.