Lumber prices fell Wednesday to their lowest level in more than three years as a slowdown in homebuilding and a surge in imported lumber glutted U.S. markets.
The price drop is a boon for homebuilders and do-it-yourselfers, but it has forced several North American timber mills to close or suspend operations.
Home Depot said Wednesday the retail price on its best-selling lumber product, 7/16-inch oriented strand board, fell last week below $6, the first time in more than 10 years that it has been priced that low.
Retail lumber prices are down 20 to 25 percent since last year and Colorado sales are up slightly this year, said Home Depot spokeswoman Kathryn Gallagher.
Lumber for November delivery fell $8 Wednesday to $232.50 per 1,000 board feet on the Chicago Mercantile Exchange, the lowest price since March 2003.
Falling lumber prices aren’t bringing down new-home prices, but they may help keep a lid on future price increases, said Bill Wood, senior vice president of operations for KB Home of Colorado.
“Lumber is just one component of our costs,” Wood said.
Lower prices for framing lumber will help the homebuilder offset rising prices for concrete, copper, roofing materials and other commodities, he said.
Colorado’s lone remaining major conifer mill, the Intermountain Resources plant in Montrose, is hanging on but struggling to survive the low prices, a mill official said.
“These are some of the worst market conditions we’ve ever seen,” said Nancy Fishering, a spokeswoman for Intermountain Resources. “The prices are below the cost of production for some West Coast mills. But sometimes you have to sell below cost just to keep some money coming in.”
The Montrose plant employs 100 workers and uses about 250 subcontractors that supply the mill with timber.
At least 10 Colorado timber mills have closed since 1986, Fishering said, victims of consolidation and competition from low-priced foreign lumber.
The price drop stems from housing starts that have declined five times in the past six months, plus a spike in timber imports from Canada as producers race to ship more product to the U.S. before a Nov. 1 export tax takes effect, analysts said.
Tembec Inc., Canada’s biggest wood-pulp producer, plans to shut three sawmills in Quebec indefinitely, affecting 436 jobs, because of slumping demand for lumber in the U.S. and Canada.
Weyerhauser Co., the largest North American lumber producer, said this week it will dismiss 300 workers at two mills in Saskatchewan effective Jan. 1.
Bloomberg News contributed to this report.
Staff writer Steve Raabe can be reached at 303-954-1948 or sraabe@denverpost.com.
