Have you ever thought about where the lumber is coming from? Have you ever wondered how lumbering is done or where is done? Have you ever guessed Why Lumber Is So Expensive?
Yeah, you landed on the right page. Lumber is the most used wood type in America. The United States is the biggest supplier of softwood lumber. Canada is the second-largest supplier of lumber. Lumber is commonly used for construction and renovation purposes. Lumbering is the process of logging lumber into furniture and construction materials. It’s a major job in Canada. The reasons for the high price,
Demand-supply fluctuation:
The major reason for its huge price increase is demand and supply fluctuations. The demand for lumber increases constantly. It is needed for renovation and construction purposes. It has high demand during the Summer season. During the winter season, people don’t have high demands. But the supply is very low. It has various reasons for low supply. There are a large amount of controllable and uncontrollable factors being the reason for a high price. Natural calamities like mudslides made delayed shipments. That is one of the reasons for the unforeseen rise in price. Wildfire in British Columbia created a shortage of lumber. Forests in British Columbia have lumber trees. Because of the huge fire supplies from British Columbia have stopped. These created huge demands which aren’t met in supply. It is known that when there is high demand and minimum supply price of the product will automatically rise and when there is low demand and high supply price of the product will automatically reduce.
The collapse in logistics:
Lumber cannot be easily moved from one place to another. Only after crossing hindrances, lumber can be delivered. Hindrances may include strikes, taxes, and tariffs. A sudden strike leads to a shortage of lumber for a certain short period. Tariffs and taxes while importing from other countries are also a reason for a high price. Road taxes and insurance for the safety of lumber are also reasons for a high price. Hence the cost of such expenses falls on buyers of lumber.
Pandemic:
The Pandemic raised the price of lumber. During the pandemic time, people were demanding lumber. They were building houses at the very beginning of the COVID-19 pandemic. Hence they needed various kinds of lumber, especially Oaktree. Construction contractors demanded a huge amount of lumber. Unfortunately, the supply of lumber has been stopped due to a widespread pandemic. Laborers refused to return to work. Everything has stopped for a while. Lumber supplying company got pressures for the supply of lumber. But the supply of lumber from the forest was stopped. Again shortage in supply created a huge demand. This made a drastic increase in the price of lumber.
Shortage in supply within the economy:
Lumber-producing companies export lumber abroad. The United States is the first largest producer and supplier of lumber. Canada is the second-largest producer and supplier followed by the United States. So huge amounts of exports create demand for lumber within the country. Hence the demand is met by short supply. There is a mismatch. This leads to a high price of lumber.
Storage difficulty:
Another huge reason is storage difficulty. There is not any proper availability of storage facility. Woods are normally huge. Hence it requires a large storage place. When there is not any proper storage place or improper maintenance, lumber becomes obsolete or deteriorates. It will become irrelevant to use(useless). Also, when lumber is imported from other countries, the port is not offering a sufficient place to store it. Hence there is a delay in supply. The lumber gets stuck on the port. This leads to a rise in the price of lumber.
demand for rare types of lumber wood:
People expect classy and comfortable life. So they want the rare type of softwood lumber. They cost high just because they are rare. Sometimes a rare type of lumber is imported. Hence import duties and charges are high. This cost gets onto the buyer automatically.
Import duties:
When lumber is imported from abroad like China and Russia, it has to pay huge import duties. Import clearance charges and duties are very high for goods. Usually, imported goods cost a lot. Hence the charges fall on the buyers. It makes lumber expensive.
Lumbering:
Lumbering is the process through which lumber is converted into furniture or useful wood piece. It is the essential process through which products are made. Without laborers for lumbering, no company can run. It requires time, money, and labor. Lumber processing is expensive. After the pandemic laborers are not coming to work. Unless Lumbering is done, lumber can not be produced. Hence this leads to an increase in the price of lumber.
Shortage of resources:
The majority of the lumber comes from the United States, the forests of British Columbia, and the Amazon forest. The resources are becoming scarce. When there is continuous extraction of lumber, it will become scarce. When a resource is scarce, the price would usually reaches its peak.
Inflation:
Inflation is a term in economics which means a price rise. When the supply of money in an economy is high, the prices of goods would normally rise. Inflation can be precisely told as” Too much money, chases too few goods”. So high circulation of money in an economy leads to high prices. This is because to reduce the supply of money in an economy. When there is inflation lumber also costs high. It is imposed on citizens. Hence the price of lumber would increase.
FAQ
1. Why is the price of lumber going up?
Answer: The price of lumber is going up because of demand and supply fluctuations. Demand is not correctly met by supply. Also, the pandemic is one of the reasons for a high price
2. Will lumber price go down in 2023?
Answer: During the winter season people don’t have high demands for lumber/ woods. Hence it is expected that the price of lumber goes down by the end of summer 2022 and 2023.
3. Where does most of the lumber come from?
Answer: United States, Canada, China, Russia, Germany.
4. Name a few largest lumber manufacturers?
Answer: West Fraser Timber Co., ltd, Sierra Pacific Industries, Interfort(International Forest Products ltd), Hampton Affiliates.