82 ms·

Why wood has gotten so dang expensive

281 points by Whitespace 5y ago

h2odragon 5y ago
The is from May; prices have fallen quite a bit off peaks I hear and some speculators are now trapped under big loads ordered 2 months ago now being delivered. There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer.
- dragontamer 5y ago
  It was clearly a sawmill issue. Lumber was expensive but timber was cheap. I don't know how to calculate if more sawmills are needed (permanent backlog) or if it's a temporary backlog. I figure that speculation is for the commodity traders and maybe some stock / sawmill speculators. In practice, guess and check may scale better? But I've also been to towns where the sawmill shut down and destroyed the local economy, so guess and check may be immoral (even if it's somewhat profitable)
  - burnte 5y ago
    This is an easy one to calcucate, you don't even need to do real math. There's a spike in consumer demand due to COVID. People are pouring money into their houses rather than external entertainment and travel. That's a temporary change.
    - dragontamer 5y ago
      Between the stimulus checks, unemployment checks, and other such policies... as well as the Fed's continued reliance upon an expanded balance sheet (kinda sorta like QE), there's worries that the increased prices are at least partially caused by inflation. If the inflation-dudes are right, then at least part of the price increase is permanent. That's why the calculations are necessary: because many people are making many different arguments about the future of this current economy. The one who can predict the future will make money of course.
- yskchu 5y ago
  Yes it has fallen a lot (nearly 50%) from the May peak: https://www.google.com/amp/s/www.businessinsider.com/lumber-prices-futures-chart-skid-below-900-commodity-inflation-board-2021-6%3famp https://www.google.com/amp/s/www.businessinsider.com/lumber-...
- punkrex 5y ago
  My FiL works in the industry on large projects, and the word from suppliers is that in Jan, prices should drop 50% from where ever Dec ends up, as there is going to be a ton of supply.
- bcrosby95 5y ago
  > There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer. I'm curious why this is. Is it the drying stage, or something else?
  - alamortsubite 5y ago
    Yes. The wood will twist and bend as it dries.
    - monetus 5y ago
      - Which, for those curious, is the the whole idea behind greenwood carpentry. https://en.m.wikipedia.org/wiki/Green_woodworking https://en.m.wikipedia.org/wiki/Green_woodworking Its a shame more of that craft isn't going around. Granted, I'm not sure how a greenwood porch would work.
      - h2odragon 5y ago
        Green white oak, especially, can do some cool stuff. I imagine you could do a porch with lap built and grain matched construction and get a "tensegrity" bonus as stuff dried; but ive never seen that trick done with anything more complicated or smaller than house siding.
      - jjeaff 5y ago
        Wouldn't work well at all for any construction that isn't using mortise and tenon or some other type of friction fit construction. Can be disastrous for traditional construction where pieces are butted up together and nailed.
  - ArkanExplorer 5y ago
    https://en.wikipedia.org/wiki/Wood_drying https://en.wikipedia.org/wiki/Wood_drying Wood for construction needs to reach an equilibrium moisture point with the outdoor air after its cut. If its dried outside, it takes months to years to dry, depending on the humidity level and temperature. The wood is dried because it makes it lighter, and the shrinkage and swelling has already played out during the drying process... instead of when its in place!
- JoeAltmaier 5y ago
  Green sawn wood is usually stacked, and the stack's own weight will hold the boards relatively straight as they dry. Build something, and the whole structure can bend and curl.
- hn_throwaway_99 5y ago
  It seems like the spectacular boom in home renovation will have to lead to an eventual bust at some point - people generally don't want to do a major renovation that often. That said, it seems like the huge spike in building materials did a very good thing by making many people postpone renovations until prices come down, which should help smooth out the peak-to-trough chart of building construction.
- pengaru 5y ago
  plywood at my local home depot is still very much at its highest price ever when I checked last week ($135 for a 1-1/8" 4x8 sheet of t&g subfloor) > There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer. The allegedly "kiln dried lumber" home depot has been selling has been criminally wet throughout the last year too. Not only have people been paying through the nose for the stuff, it's been nowhere near ready to use. I had to let boards I bought for building gambrel rafters sit for a month on my covered deck before attempting to cut them to the pattern. And even after that, a bunch of them shrunk another 1/4" from the pattern in the subsequent month of waiting for me to install. Infuriating to pay so much for stuff that isn't even top quality and ready to go. I also had to throw a few away from splitting and twisting during the drying process...
  - axaxs 5y ago
    Yeah, prices are still ridiculous. Apparently it takes a couple months for the aforementioned price drops in futures to trickle down. If HD bought it for 100, they ain't gonna sell it for 50 regardless of what sawmills are doing(unless of course forced to with overstock and such).
    - sokoloff 5y ago
      If the market-clearing price that their competitors are selling it for is $50, they’ll sell it for around $50 or they won’t sell it.
      - YokoZar 5y ago
        You two are saying the same thing. If they won't sell due to an uncompetitively high price, then they'll have overstock. Then they'll be "forced to" sell lower.
        sokoloff 5y ago
        I’m saying they’ll do it even if they’re just normally (or even partially) stocked with material. They know their customers are cross-shopping them with other stores, they need to be competitive, and they don’t want to lose the rest of the order lines nor train customers that they’re not competitively priced.
- dev_tty01 5y ago
  Yeah, its a shame the article left off what is probably one of the biggest reasons for the price spike. Speculation. 4x price spikes in a relatively stable commodity aren't explained by simple supply/demand economic factors. The article is a couple of months old and we can now see the speculative bubble unwinding. https://markets.businessinsider.com/commodities/lumber-price https://markets.businessinsider.com/commodities/lumber-price Down 8% two days ago. Down over 50% from the peak. No doubt prices will remain above trend for a while, but 4X is just another case of speculative nonsense over-amplifying the realities.
  - themodelplumber 5y ago
    Just from a technical perspective, the 1Y chart on that page shows some real promise, for example higher highs and higher lows on multiple time scales. I'm not terribly interested in lumber but if you want a good price, with that chart it seems like now may be a great time to buy given the current low. It may also be the last time at that price level for a while. (No promises, just what I'd speculate based on the chart) Edit: To clarify, this comment is mostly registering my surprise. I see no cabal speculation activity, just a big invite for your neighbor to buy some for their active retirement fund at these levels. Think about that as another variable.
    - catillac 5y ago
      I can’t quite tell if you’re either lampshading/mocking speculator thinking or if this is sincere. But the thinking behind the above comment largely seems to be the source of all the problems.
      - themodelplumber 5y ago
        Is this thinking _really_ the source of all the problems? I have to admit I expected to see something idiotic when I clicked through to the link! Like, "pshah, pure speculation!" but instead I am looking at a chart that any broker worth their salt, even a conservative one, might green-light for a client right now, today. So I'm sharing what I'm seeing and no, this doesn't perfectly fit a speculation-cabal mindset. IOW: This is clearly a price level where your non-cabal types will happily buy in and take a reasonable profit later. For all we know, the really evil ones could have brought it down to this level. So are we going to pin the blame on those millions of people attempting to prepare for a retirement? And there's nothing wrong with sharing another perspective, is there, really? Nobody's even proven, or shown how speculation is the source of the problem. It's just expected that we simply believe that? Speculation could be a side effect for all we really know. I've been trading technicals for years, and a huge lesson you learn is that everybody has a "why", and everybody has a story, but it always comes late. You then turn around and see the same patterns in nature and start to realize: "Why" can be a terribly unhelpful and misleading direction to take your solutions-oriented mindset. If you want to cut down on speculation, IMO you need to look into things critically, deeply, and everybody's "why" ought to be first. Was it _really_ speculation? Or are speculators just watching natural patterns unfold and joining the ride? Metaphorically: Even if it feels amazing to pin the blame on the fox who got into the hen house, do you want to go after every fox in the forest, or maybe understand the fox better--draw the foxes around to another location, or design a hen house with doors on it? I visited the link with an open mind. But I have experience with charts like that and I can tell you, people will buy here, and the price will very likely go up again. I just think that we can do better, creatively if we want to "solve" the greater lumber issue.
- divbzero 5y ago
  It’s fascinating how consistently the shortage and glut cycle plays out across a diverse range of commodities. The common elements seem to be an undifferentiated product and some delay in the production cycle. The length of shortage and glut depends on the length of delay, which is exacerbated if production depends on fixed assets that take a long time to build and a long time to wear down (e.g. ships).
humbleMouse 5y ago
This is old news, lumber futures are around 800 dollars now.
- typon 5y ago
  "old news"? That's still double the price compared to 2019
  - spamizbad 5y ago
    They’re now at 775. They are still declining rapidly.
    - simplify 5y ago
      What website do you use to monitor this?
      - 0x53 5y ago
        https://www.nasdaq.com/market-activity/commodities/lbs https://www.nasdaq.com/market-activity/commodities/lbs
        pjc50 5y ago
        That looks uncannily like the Bitcoin price chart.
        quickthrowman 5y ago
        The Bitcoin chart looks like the 18th century south sea bubble chart: https://en.m.wikipedia.org/wiki/File:South-sea-bubble-chart.png https://en.m.wikipedia.org/wiki/File:South-sea-bubble-chart.... https://en.m.wikipedia.org/wiki/South_Sea_Company https://en.m.wikipedia.org/wiki/South_Sea_Company Bubbles are not a new phenomenon by any means
beebeepka 5y ago
"in the US"... This habit if speaking as if one is the center of the universe is a bit tiring
- selfhoster11 5y ago
  I understand that this website is SV boy's club, but really I expect something more from an audience that is more cosmopolitan and world-educated than the average.
  - echelon 5y ago
    All that vitriol for not adding a clause to make you feel included? The majority of HN posters are probably in the US. I don't get upset when articles are posted about the Bay Area, where I don't happen to live.
    - publicola1990 5y ago
      I will make a guess that majority of HN readers are outside the US of A.
      - da_big_ghey 5y ago
        No, number are about half split in two: https://news.ycombinator.com/item?id=26869936 https://news.ycombinator.com/item?id=26869936
        OJFord 5y ago
        Not GP but that does surprise me too. I would've guessed USA by far the largest single country, but <<50% total. (dang does say there that's a few years old, so could've changed a bit, but I think I would've guessed the same then too.)
    - selfhoster11 5y ago
      It's not vitriol, it's an objective observation that this website is by and for a specific audience. Perhaps my phrasing is pithy, but that is on purpose.
kube-system 5y ago
Lumber price soared globally as well, for the same reasons. COVID was a global thing, after all. https://m.dw.com/en/demand-for-lumber-soars-in-germany-and-so-do-prices/a-57549125 https://m.dw.com/en/demand-for-lumber-soars-in-germany-and-s... That being said, as the article mentions, most lumber in North America is from Canada, not the US.
- oblak 5y ago
  I understand but the article is clearly written with the US in mind. In that sense, adding a few more letters, for context, would've been appreciated.
- jbay808 5y ago
  Yes, I can confirm that lumber prices in Canada went sky-high.
- unnah 5y ago
  Also, lumber is traded globally. US buyers have been importing more lumber from Europe during COVID than before. I guess that means that the demand has been higher in the US.
- qwertox 5y ago
  The shortage isn't that much a result from the pandemic and people doing more DIY-projects, but because the US and China (and also Germany, if we talk about local wood) are building a lot of houses. China buys more wood from Germany now that Russia has set an export ban on wood. The only odd thing which I see is that the export ban is supposed to start in January 2022 [1] so I don't understand why China is already starting to buy more wood from Germany. [1] https://www.margulesgroome.com/publications/russias-proposed-log-export-ban-in-2022-will-have-a-far-reaching-impact-on-global-forest-product-markets/ https://www.margulesgroome.com/publications/russias-proposed...
  - kube-system 5y ago
    Those DIY projects, increase in home improvement, and increase in housing demand has been due to the changes in people's consumption patterns because of changes in people's work patterns due to the pandemic.
deleted 5y ago
[deleted]
praptak 5y ago
Okay, people stay at home more, so they need more space, so there's demand for construction. What about the spaces people used to occupy before covid moved them home? Does it drive demand for demolition?
- cpach 5y ago
  I guess people hope to return some day. To public libraries, pubs, restaurants, etc.
- rantwasp 5y ago
  i wish this was a demand and supply thing but I am really afraid this is going to turn out to be inflation. And it’s actually all the prices that are going up - we’re just talking about wood because we have a good narrative around it.
  - treis 5y ago
    Lumber prices have tripled for dimensional lumber. It's clearly a short term supply/demand thing and not an inflation thing.
    - rantwasp 5y ago
      why not both? IMHO inflation is real and it's going to bite us hard
    - lazide 5y ago
      What people consider ‘bad’ inflation is too much money/demand chasing constrained supply that can’t keep up. If it is a required/needed good, that causes people to raise the amount they are willing to spend to get what they need. Inflationary spirals happen when this ‘infects’ enough markets. Everyone is spending all their money chasing an ever harder to get/more expensive set of essentials, and are willing to spend more and more as time goes on as they get more desperate. Lumber is probably negotiable/non-essential enough it’s not likely to kick off an inflationary spiral. Food, rent, transportation, though tend to be key.
kevinthew 5y ago
Great summary and analysis. The context on the cracker shutdowns in February makes it all the more clear. This processing bottleneck has been playing out across the commodities sphere as the 2nd order impacts from COVID play out.
cube00 5y ago
It was sad to hear the larger construction companies using their buying power to purchase all available stock and store in their warehouses with no assigned jobs. They were pushing smaller construction companies to the wall when they couldn't access any stock for jobs they actually had on.
- mathgladiator 5y ago
  It's like the real-life monopoly game being played in real life. Buy up all the houses, don't upgrade them to hotels until you can buy them back.
- sokoloff 5y ago
  If you are a construction company and anticipate a possible/likely disruption in one of your critical raw materials and have the funds to protect your business, what else would you do? It doesn’t sound predatory; rather it sounds eminently sensible.
  - SQueeeeeL 5y ago
    Tragedy of the Commons is sensible. Businesses exist to maximize their own existence. Must suck to be one of those tiny firms lol
SavantIdiot 5y ago
"Because the storm occurred with very little warning, many factories weren’t able to shut down properly, resulting in polymers congealing and solidifying in the equipment" Wow, I'm surprised there weren't back-up generators if power failure means machine destruction.
- ttyprintk 5y ago
  The backup systems relied on natural gas, which was cut off, and/or secondary electrical which was disabled by Texas regulators. I also wonder if those backups didn’t anticipate having to run the machines as well as keeping ambient temperature up.
seaorg 5y ago
Take it from a guy who works in the industry. https://youtu.be/zCvEFXSYFS8 https://youtu.be/zCvEFXSYFS8
AtlasBarfed 5y ago
When will empress tree farming start? it's vields are 2-4x the rate of other woods and supposedly is construction usable?
- avhon1 5y ago
  That seems unlikely in the U.S., since it's an invasive species that out-competes native trees. https://www.invasivespeciesinfo.gov/terrestrial/plants/princess-tree https://www.invasivespeciesinfo.gov/terrestrial/plants/princ...
  - Robotbeat 5y ago
    How is that an argument against farms of it? Does Europe not grow maize because it’s a New World crop?
    - Ryan_Goosling 5y ago
      Seems like a valid argument. I wonder what an environmentalist would have to say, considering a bird can carry seeds away from a farm, right?
    - cossatot 5y ago
      Maize is a cultigen and can’t reproduce without human intervention so it cannot get to be invasive.
- coryrc 5y ago
  It's weaker than SPF and would require engineering hours to substitute.
  - AtlasBarfed 5y ago
    https://www.worldtree.eco/empress-lumber/ https://www.worldtree.eco/empress-lumber/ It doesn't appear to be fundamentally weaker for many applications. If it's yields are 3-4x times what "SPF" is, then maybe use slightly larger boards in support roles? I'm not associated with worldtree.eco, and obviously they are advertising a product, but I can't really find any more discussion on the pro/cons of empress tree wood production. The invasiveness problem I heard was specific to a particular species of empress, there are empress species that don't spread so aggressively.
mothsonasloth 5y ago
I am in Scotland and we are struggling for all sorts of materials: - PIR insulation - Membranes (DPM, Roof membranes, Vapor check) - External Cladding (red cedar, siberian larch) - Concrete I've had all range of excuses; Covid19, Brexit, Suez Canal and Americans are stealing lumber from Europe. There are some lumber mills in the Highlands of Scotland that are shipping CLS and other framing timber straight to USA.
- myself248 5y ago
  > Americans are stealing lumber from Europe I'm picturing Carmen Sandiego putting a freighter full of lumber in her pocket...
barnyfried 5y ago
Land owners in the south are getting squeezed by the mills to the point there's almost no profit in growing trees. Some of them are turning to selling "renewable energy" in the form of wood pellets for "renewable energy" power plants. In other words, its more profitable to burn trees then sell them to sawmills. Pretty interesting how I was bag-shamed at the grocery store years ago using paper bags. And now those same people are using paper bags. I guess in the rock paper scissors of woke environmental policy, dolphins always beat trees.
jjav 5y ago
Any good source for a graph tracking lumber prices week to week at the retail shelf (as opposed to futures pricing which is easy to find)?
qwertox 5y ago
Just today I was listening to a German podcast on this topic ("Warum Bauholz zurzeit knapp und teuer ist") [1]. Main explanation of it having become so expensive in Germany as well is the high demand in the US, China and in Germany itself. Russia has set an export ban on wood, so China is buying more from Germany. Germany currently has a surplus of wood, yet the prices aren't low. Sawmills are the main benefactors of the current situation, they're processing wood like never before, also because last year a lot of trees were affected by beetles, fungi, storms and the like. So this lower quality wood (which is perfectly fine to use) has been mainly exported. 40% of the processed wood is exported. Sawmills are buying the trees for cheap due to the surplus that the forest owners (around 96% of the owners own less than 20 ha) are saying that they're now considering to stop selling wood and wait for the fall or next year if they can handle it. Then again, if they stop selling the wood, the state- or community-owned forest owners (around half of the German forests are privately owned, the other half by the state or communities) might not be able to to pay for the machinery and workers which usually work the entire year around. Also private owners have got together and share machinery and personell which needs to get payed during the entire year. So to some degree they are forced to continue cutting down trees to sell them. [1] https://www.deutschlandfunk.de/probleme-der-baubranche-warum-bauholz-zurzeit-knapp-und.724.de.html?dram:article_id=498705 https://www.deutschlandfunk.de/probleme-der-baubranche-warum...
GeorgeTirebiter 5y ago
Why has wood gotten so expensive? It's not like this stuff grows on trees! Oh, wait....
RickJWagner 5y ago
I'm a wood working hobbyist. I used to pay about $3 for an 8 foot 2x4 at the local big-box / lumber store. I looked this week -- $9 for the same lumber! I'm going to wait for this to blow over before I build anything, I think.
aazaa 5y ago
The article is from May. A lot has happened since then. This chart of lumber futures gives an idea of the recent past (zoom out 1-5 years for perspective): <https://www.tradingview.com/chart/?symbol=CME%3ALBS1! https://www.tradingview.com/chart/?symbol=CME%3ALBS1!> In a nutshell: a huge advance and now what appears to be a crash (~ -50%) is currently in progress. The bigger picture is how indicative this compressed boom-bust story is of the future of the surge in US inflation. Lumber is showing us how easy it is for the market to reject ridiculous prices. What's unclear is how low lumber, and other goods/commoditiies that have seen similar booms, can go. Edit: this links seems to work better https://www.tradingview.com/symbols/CME-LBS1%21/ https://www.tradingview.com/symbols/CME-LBS1%21/
- ketamine__ 5y ago
  Chart doesn't load. I'm on Brave. What am I missing? Downvotes? Really? Eat shit.
  - yhoneycomb 5y ago
    Doesn't load for me either (Firefox) edit: Doesn't even load on Chrome. I think it's just a bad link. Or a bad site.
    - Izkata 5y ago
      I was a about to reply confirming and saw it was just edited: The ! is part of the link and now it works
  - aazaa 5y ago
    Odd. I found a better link: https://www.tradingview.com/symbols/CME-LBS1%21/ https://www.tradingview.com/symbols/CME-LBS1%21/
    - rsa25519 5y ago
      This issue is that HN didn't include the trailing exclamation mark as part of the link
ur-whale 5y ago
Is this just a US thing or is it global?
- cmrdporcupine 5y ago
  global
RyanGoosling 5y ago
Guys, maybe you can help me. Should I buy a house in California in this market? Or will it all crash when the foreclosure ban ends at the end of July???
Johnny555 5y ago
Compounding these issues was the Texas Ice Storm in February, which knocked out roughly 80% of US polymer production. Because the storm occurred with very little warning, many factories weren’t able to shut down properly, resulting in polymers congealing and solidifying in the equipment. I'm surprised it's not cost effective to have backup generators to power critical equipment long enough for a graceful shutdown if an ungraceful shutdown can keep a plant offline for a month or longer.

281 points by Whitespace 5y ago

The is from May; prices have fallen quite a bit off peaks I hear and some speculators are now trapped under big loads ordered 2 months ago now being delivered. There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer.

dragontamer 5y ago
It was clearly a sawmill issue. Lumber was expensive but timber was cheap. I don't know how to calculate if more sawmills are needed (permanent backlog) or if it's a temporary backlog. I figure that speculation is for the commodity traders and maybe some stock / sawmill speculators. In practice, guess and check may scale better? But I've also been to towns where the sawmill shut down and destroyed the local economy, so guess and check may be immoral (even if it's somewhat profitable)
- burnte 5y ago
  This is an easy one to calcucate, you don't even need to do real math. There's a spike in consumer demand due to COVID. People are pouring money into their houses rather than external entertainment and travel. That's a temporary change.
  - dragontamer 5y ago
    Between the stimulus checks, unemployment checks, and other such policies... as well as the Fed's continued reliance upon an expanded balance sheet (kinda sorta like QE), there's worries that the increased prices are at least partially caused by inflation. If the inflation-dudes are right, then at least part of the price increase is permanent. That's why the calculations are necessary: because many people are making many different arguments about the future of this current economy. The one who can predict the future will make money of course.
yskchu 5y ago
Yes it has fallen a lot (nearly 50%) from the May peak: https://www.google.com/amp/s/www.businessinsider.com/lumber-prices-futures-chart-skid-below-900-commodity-inflation-board-2021-6%3famp https://www.google.com/amp/s/www.businessinsider.com/lumber-...
punkrex 5y ago
My FiL works in the industry on large projects, and the word from suppliers is that in Jan, prices should drop 50% from where ever Dec ends up, as there is going to be a ton of supply.
bcrosby95 5y ago
> There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer. I'm curious why this is. Is it the drying stage, or something else?
- alamortsubite 5y ago
  Yes. The wood will twist and bend as it dries.
  - monetus 5y ago
    - Which, for those curious, is the the whole idea behind greenwood carpentry. https://en.m.wikipedia.org/wiki/Green_woodworking https://en.m.wikipedia.org/wiki/Green_woodworking Its a shame more of that craft isn't going around. Granted, I'm not sure how a greenwood porch would work.
    - h2odragon 5y ago
      Green white oak, especially, can do some cool stuff. I imagine you could do a porch with lap built and grain matched construction and get a "tensegrity" bonus as stuff dried; but ive never seen that trick done with anything more complicated or smaller than house siding.
    - jjeaff 5y ago
      Wouldn't work well at all for any construction that isn't using mortise and tenon or some other type of friction fit construction. Can be disastrous for traditional construction where pieces are butted up together and nailed.
- ArkanExplorer 5y ago
  https://en.wikipedia.org/wiki/Wood_drying https://en.wikipedia.org/wiki/Wood_drying Wood for construction needs to reach an equilibrium moisture point with the outdoor air after its cut. If its dried outside, it takes months to years to dry, depending on the humidity level and temperature. The wood is dried because it makes it lighter, and the shrinkage and swelling has already played out during the drying process... instead of when its in place!
JoeAltmaier 5y ago
Green sawn wood is usually stacked, and the stack's own weight will hold the boards relatively straight as they dry. Build something, and the whole structure can bend and curl.
hn_throwaway_99 5y ago
It seems like the spectacular boom in home renovation will have to lead to an eventual bust at some point - people generally don't want to do a major renovation that often. That said, it seems like the huge spike in building materials did a very good thing by making many people postpone renovations until prices come down, which should help smooth out the peak-to-trough chart of building construction.
pengaru 5y ago
plywood at my local home depot is still very much at its highest price ever when I checked last week ($135 for a 1-1/8" 4x8 sheet of t&g subfloor) > There's "we bought a sawmill!" ads here in the rural lands now for fresh sawn green pine and oak; which isn't "lumber" yet in any useful sense. I've seen porches being built that won't last the summer. The allegedly "kiln dried lumber" home depot has been selling has been criminally wet throughout the last year too. Not only have people been paying through the nose for the stuff, it's been nowhere near ready to use. I had to let boards I bought for building gambrel rafters sit for a month on my covered deck before attempting to cut them to the pattern. And even after that, a bunch of them shrunk another 1/4" from the pattern in the subsequent month of waiting for me to install. Infuriating to pay so much for stuff that isn't even top quality and ready to go. I also had to throw a few away from splitting and twisting during the drying process...
- axaxs 5y ago
  Yeah, prices are still ridiculous. Apparently it takes a couple months for the aforementioned price drops in futures to trickle down. If HD bought it for 100, they ain't gonna sell it for 50 regardless of what sawmills are doing(unless of course forced to with overstock and such).
  - sokoloff 5y ago
    If the market-clearing price that their competitors are selling it for is $50, they’ll sell it for around $50 or they won’t sell it.
    - YokoZar 5y ago
      You two are saying the same thing. If they won't sell due to an uncompetitively high price, then they'll have overstock. Then they'll be "forced to" sell lower.
      - sokoloff 5y ago
        I’m saying they’ll do it even if they’re just normally (or even partially) stocked with material. They know their customers are cross-shopping them with other stores, they need to be competitive, and they don’t want to lose the rest of the order lines nor train customers that they’re not competitively priced.
dev_tty01 5y ago
Yeah, its a shame the article left off what is probably one of the biggest reasons for the price spike. Speculation. 4x price spikes in a relatively stable commodity aren't explained by simple supply/demand economic factors. The article is a couple of months old and we can now see the speculative bubble unwinding. https://markets.businessinsider.com/commodities/lumber-price https://markets.businessinsider.com/commodities/lumber-price Down 8% two days ago. Down over 50% from the peak. No doubt prices will remain above trend for a while, but 4X is just another case of speculative nonsense over-amplifying the realities.
- themodelplumber 5y ago
  Just from a technical perspective, the 1Y chart on that page shows some real promise, for example higher highs and higher lows on multiple time scales. I'm not terribly interested in lumber but if you want a good price, with that chart it seems like now may be a great time to buy given the current low. It may also be the last time at that price level for a while. (No promises, just what I'd speculate based on the chart) Edit: To clarify, this comment is mostly registering my surprise. I see no cabal speculation activity, just a big invite for your neighbor to buy some for their active retirement fund at these levels. Think about that as another variable.
  - catillac 5y ago
    I can’t quite tell if you’re either lampshading/mocking speculator thinking or if this is sincere. But the thinking behind the above comment largely seems to be the source of all the problems.
    - themodelplumber 5y ago
      Is this thinking _really_ the source of all the problems? I have to admit I expected to see something idiotic when I clicked through to the link! Like, "pshah, pure speculation!" but instead I am looking at a chart that any broker worth their salt, even a conservative one, might green-light for a client right now, today. So I'm sharing what I'm seeing and no, this doesn't perfectly fit a speculation-cabal mindset. IOW: This is clearly a price level where your non-cabal types will happily buy in and take a reasonable profit later. For all we know, the really evil ones could have brought it down to this level. So are we going to pin the blame on those millions of people attempting to prepare for a retirement? And there's nothing wrong with sharing another perspective, is there, really? Nobody's even proven, or shown how speculation is the source of the problem. It's just expected that we simply believe that? Speculation could be a side effect for all we really know. I've been trading technicals for years, and a huge lesson you learn is that everybody has a "why", and everybody has a story, but it always comes late. You then turn around and see the same patterns in nature and start to realize: "Why" can be a terribly unhelpful and misleading direction to take your solutions-oriented mindset. If you want to cut down on speculation, IMO you need to look into things critically, deeply, and everybody's "why" ought to be first. Was it _really_ speculation? Or are speculators just watching natural patterns unfold and joining the ride? Metaphorically: Even if it feels amazing to pin the blame on the fox who got into the hen house, do you want to go after every fox in the forest, or maybe understand the fox better--draw the foxes around to another location, or design a hen house with doors on it? I visited the link with an open mind. But I have experience with charts like that and I can tell you, people will buy here, and the price will very likely go up again. I just think that we can do better, creatively if we want to "solve" the greater lumber issue.
divbzero 5y ago
It’s fascinating how consistently the shortage and glut cycle plays out across a diverse range of commodities. The common elements seem to be an undifferentiated product and some delay in the production cycle. The length of shortage and glut depends on the length of delay, which is exacerbated if production depends on fixed assets that take a long time to build and a long time to wear down (e.g. ships).

humbleMouse 5y ago

This is old news, lumber futures are around 800 dollars now.

typon 5y ago
"old news"? That's still double the price compared to 2019
- spamizbad 5y ago
  They’re now at 775. They are still declining rapidly.
  - simplify 5y ago
    What website do you use to monitor this?
    - 0x53 5y ago
      https://www.nasdaq.com/market-activity/commodities/lbs https://www.nasdaq.com/market-activity/commodities/lbs
      - pjc50 5y ago
        That looks uncannily like the Bitcoin price chart.
        quickthrowman 5y ago
        The Bitcoin chart looks like the 18th century south sea bubble chart: https://en.m.wikipedia.org/wiki/File:South-sea-bubble-chart.png https://en.m.wikipedia.org/wiki/File:South-sea-bubble-chart.... https://en.m.wikipedia.org/wiki/South_Sea_Company https://en.m.wikipedia.org/wiki/South_Sea_Company Bubbles are not a new phenomenon by any means

beebeepka 5y ago

"in the US"... This habit if speaking as if one is the center of the universe is a bit tiring

selfhoster11 5y ago
I understand that this website is SV boy's club, but really I expect something more from an audience that is more cosmopolitan and world-educated than the average.
- echelon 5y ago
  All that vitriol for not adding a clause to make you feel included? The majority of HN posters are probably in the US. I don't get upset when articles are posted about the Bay Area, where I don't happen to live.
  - publicola1990 5y ago
    I will make a guess that majority of HN readers are outside the US of A.
    - da_big_ghey 5y ago
      No, number are about half split in two: https://news.ycombinator.com/item?id=26869936 https://news.ycombinator.com/item?id=26869936
      - OJFord 5y ago
        Not GP but that does surprise me too. I would've guessed USA by far the largest single country, but <<50% total. (dang does say there that's a few years old, so could've changed a bit, but I think I would've guessed the same then too.)
  - selfhoster11 5y ago
    It's not vitriol, it's an objective observation that this website is by and for a specific audience. Perhaps my phrasing is pithy, but that is on purpose.

kube-system 5y ago

Lumber price soared globally as well, for the same reasons. COVID was a global thing, after all. https://m.dw.com/en/demand-for-lumber-soars-in-germany-and-so-do-prices/a-57549125 https://m.dw.com/en/demand-for-lumber-soars-in-germany-and-s... That being said, as the article mentions, most lumber in North America is from Canada, not the US.

oblak 5y ago
I understand but the article is clearly written with the US in mind. In that sense, adding a few more letters, for context, would've been appreciated.
jbay808 5y ago
Yes, I can confirm that lumber prices in Canada went sky-high.
unnah 5y ago
Also, lumber is traded globally. US buyers have been importing more lumber from Europe during COVID than before. I guess that means that the demand has been higher in the US.
qwertox 5y ago
The shortage isn't that much a result from the pandemic and people doing more DIY-projects, but because the US and China (and also Germany, if we talk about local wood) are building a lot of houses. China buys more wood from Germany now that Russia has set an export ban on wood. The only odd thing which I see is that the export ban is supposed to start in January 2022 [1] so I don't understand why China is already starting to buy more wood from Germany. [1] https://www.margulesgroome.com/publications/russias-proposed-log-export-ban-in-2022-will-have-a-far-reaching-impact-on-global-forest-product-markets/ https://www.margulesgroome.com/publications/russias-proposed...
- kube-system 5y ago
  Those DIY projects, increase in home improvement, and increase in housing demand has been due to the changes in people's consumption patterns because of changes in people's work patterns due to the pandemic.

deleted 5y ago

[deleted]

praptak 5y ago

Okay, people stay at home more, so they need more space, so there's demand for construction. What about the spaces people used to occupy before covid moved them home? Does it drive demand for demolition?

cpach 5y ago
I guess people hope to return some day. To public libraries, pubs, restaurants, etc.
rantwasp 5y ago
i wish this was a demand and supply thing but I am really afraid this is going to turn out to be inflation. And it’s actually all the prices that are going up - we’re just talking about wood because we have a good narrative around it.
- treis 5y ago
  Lumber prices have tripled for dimensional lumber. It's clearly a short term supply/demand thing and not an inflation thing.
  - rantwasp 5y ago
    why not both? IMHO inflation is real and it's going to bite us hard
  - lazide 5y ago
    What people consider ‘bad’ inflation is too much money/demand chasing constrained supply that can’t keep up. If it is a required/needed good, that causes people to raise the amount they are willing to spend to get what they need. Inflationary spirals happen when this ‘infects’ enough markets. Everyone is spending all their money chasing an ever harder to get/more expensive set of essentials, and are willing to spend more and more as time goes on as they get more desperate. Lumber is probably negotiable/non-essential enough it’s not likely to kick off an inflationary spiral. Food, rent, transportation, though tend to be key.

kevinthew 5y ago

Great summary and analysis. The context on the cracker shutdowns in February makes it all the more clear. This processing bottleneck has been playing out across the commodities sphere as the 2nd order impacts from COVID play out.

cube00 5y ago

It was sad to hear the larger construction companies using their buying power to purchase all available stock and store in their warehouses with no assigned jobs. They were pushing smaller construction companies to the wall when they couldn't access any stock for jobs they actually had on.

mathgladiator 5y ago
It's like the real-life monopoly game being played in real life. Buy up all the houses, don't upgrade them to hotels until you can buy them back.
sokoloff 5y ago
If you are a construction company and anticipate a possible/likely disruption in one of your critical raw materials and have the funds to protect your business, what else would you do? It doesn’t sound predatory; rather it sounds eminently sensible.
- SQueeeeeL 5y ago
  Tragedy of the Commons is sensible. Businesses exist to maximize their own existence. Must suck to be one of those tiny firms lol

SavantIdiot 5y ago

"Because the storm occurred with very little warning, many factories weren’t able to shut down properly, resulting in polymers congealing and solidifying in the equipment" Wow, I'm surprised there weren't back-up generators if power failure means machine destruction.

ttyprintk 5y ago
The backup systems relied on natural gas, which was cut off, and/or secondary electrical which was disabled by Texas regulators. I also wonder if those backups didn’t anticipate having to run the machines as well as keeping ambient temperature up.

seaorg 5y ago

Take it from a guy who works in the industry. https://youtu.be/zCvEFXSYFS8 https://youtu.be/zCvEFXSYFS8

AtlasBarfed 5y ago

When will empress tree farming start? it's vields are 2-4x the rate of other woods and supposedly is construction usable?

avhon1 5y ago
That seems unlikely in the U.S., since it's an invasive species that out-competes native trees. https://www.invasivespeciesinfo.gov/terrestrial/plants/princess-tree https://www.invasivespeciesinfo.gov/terrestrial/plants/princ...
- Robotbeat 5y ago
  How is that an argument against farms of it? Does Europe not grow maize because it’s a New World crop?
  - Ryan_Goosling 5y ago
    Seems like a valid argument. I wonder what an environmentalist would have to say, considering a bird can carry seeds away from a farm, right?
  - cossatot 5y ago
    Maize is a cultigen and can’t reproduce without human intervention so it cannot get to be invasive.
coryrc 5y ago
It's weaker than SPF and would require engineering hours to substitute.
- AtlasBarfed 5y ago
  https://www.worldtree.eco/empress-lumber/ https://www.worldtree.eco/empress-lumber/ It doesn't appear to be fundamentally weaker for many applications. If it's yields are 3-4x times what "SPF" is, then maybe use slightly larger boards in support roles? I'm not associated with worldtree.eco, and obviously they are advertising a product, but I can't really find any more discussion on the pro/cons of empress tree wood production. The invasiveness problem I heard was specific to a particular species of empress, there are empress species that don't spread so aggressively.

mothsonasloth 5y ago

I am in Scotland and we are struggling for all sorts of materials: - PIR insulation - Membranes (DPM, Roof membranes, Vapor check) - External Cladding (red cedar, siberian larch) - Concrete I've had all range of excuses; Covid19, Brexit, Suez Canal and Americans are stealing lumber from Europe. There are some lumber mills in the Highlands of Scotland that are shipping CLS and other framing timber straight to USA.

myself248 5y ago
> Americans are stealing lumber from Europe I'm picturing Carmen Sandiego putting a freighter full of lumber in her pocket...

barnyfried 5y ago

Land owners in the south are getting squeezed by the mills to the point there's almost no profit in growing trees. Some of them are turning to selling "renewable energy" in the form of wood pellets for "renewable energy" power plants. In other words, its more profitable to burn trees then sell them to sawmills. Pretty interesting how I was bag-shamed at the grocery store years ago using paper bags. And now those same people are using paper bags. I guess in the rock paper scissors of woke environmental policy, dolphins always beat trees.

jjav 5y ago

Any good source for a graph tracking lumber prices week to week at the retail shelf (as opposed to futures pricing which is easy to find)?

qwertox 5y ago

Just today I was listening to a German podcast on this topic ("Warum Bauholz zurzeit knapp und teuer ist") [1]. Main explanation of it having become so expensive in Germany as well is the high demand in the US, China and in Germany itself. Russia has set an export ban on wood, so China is buying more from Germany. Germany currently has a surplus of wood, yet the prices aren't low. Sawmills are the main benefactors of the current situation, they're processing wood like never before, also because last year a lot of trees were affected by beetles, fungi, storms and the like. So this lower quality wood (which is perfectly fine to use) has been mainly exported. 40% of the processed wood is exported. Sawmills are buying the trees for cheap due to the surplus that the forest owners (around 96% of the owners own less than 20 ha) are saying that they're now considering to stop selling wood and wait for the fall or next year if they can handle it. Then again, if they stop selling the wood, the state- or community-owned forest owners (around half of the German forests are privately owned, the other half by the state or communities) might not be able to to pay for the machinery and workers which usually work the entire year around. Also private owners have got together and share machinery and personell which needs to get payed during the entire year. So to some degree they are forced to continue cutting down trees to sell them. [1] https://www.deutschlandfunk.de/probleme-der-baubranche-warum-bauholz-zurzeit-knapp-und.724.de.html?dram:article_id=498705 https://www.deutschlandfunk.de/probleme-der-baubranche-warum...

GeorgeTirebiter 5y ago

Why has wood gotten so expensive? It's not like this stuff grows on trees! Oh, wait....

RickJWagner 5y ago

I'm a wood working hobbyist. I used to pay about $3 for an 8 foot 2x4 at the local big-box / lumber store. I looked this week -- $9 for the same lumber! I'm going to wait for this to blow over before I build anything, I think.

aazaa 5y ago

The article is from May. A lot has happened since then. This chart of lumber futures gives an idea of the recent past (zoom out 1-5 years for perspective): <https://www.tradingview.com/chart/?symbol=CME%3ALBS1! https://www.tradingview.com/chart/?symbol=CME%3ALBS1!> In a nutshell: a huge advance and now what appears to be a crash (~ -50%) is currently in progress. The bigger picture is how indicative this compressed boom-bust story is of the future of the surge in US inflation. Lumber is showing us how easy it is for the market to reject ridiculous prices. What's unclear is how low lumber, and other goods/commoditiies that have seen similar booms, can go. Edit: this links seems to work better https://www.tradingview.com/symbols/CME-LBS1%21/ https://www.tradingview.com/symbols/CME-LBS1%21/

ketamine__ 5y ago
Chart doesn't load. I'm on Brave. What am I missing? Downvotes? Really? Eat shit.
- yhoneycomb 5y ago
  Doesn't load for me either (Firefox) edit: Doesn't even load on Chrome. I think it's just a bad link. Or a bad site.
  - Izkata 5y ago
    I was a about to reply confirming and saw it was just edited: The ! is part of the link and now it works
- aazaa 5y ago
  Odd. I found a better link: https://www.tradingview.com/symbols/CME-LBS1%21/ https://www.tradingview.com/symbols/CME-LBS1%21/
  - rsa25519 5y ago
    This issue is that HN didn't include the trailing exclamation mark as part of the link

ur-whale 5y ago

Is this just a US thing or is it global?

cmrdporcupine 5y ago
global

RyanGoosling 5y ago

Guys, maybe you can help me. Should I buy a house in California in this market? Or will it all crash when the foreclosure ban ends at the end of July???

Johnny555 5y ago

Compounding these issues was the Texas Ice Storm in February, which knocked out roughly 80% of US polymer production. Because the storm occurred with very little warning, many factories weren’t able to shut down properly, resulting in polymers congealing and solidifying in the equipment. I'm surprised it's not cost effective to have backup generators to power critical equipment long enough for a graceful shutdown if an ungraceful shutdown can keep a plant offline for a month or longer.