We want to keep you informed on the commodity lumber market. Over the last few months, lumber prices have rapidly soared to new records easily surpassing levels set in 2018. Customers have expressed concern about what is going on in the market, and rightly so. You have questions, and we want to provide answers.
First, the lumber market is experiencing record high prices, and it happened quickly. The Random Lengths Framing Composite Price hit $743 per thousand board feet for the week ending August 14, 2020. We expect prices to remain at this level or higher for the foreseeable future. Customers have asked us why this is happening? The basic answer is supply and demand.
Briefly, sawmills slowed production during the spring due to stay-at-home and social distancing measures enacted by state and local governments. When prices fell between March and April as a result of the COVID-19 pandemic, mills projected that housing would be adversely affected and therefore anticipated a massive drop in demand. Mills that remained operational substantially decreased capacity utilization. Producers did not expect the enormous uptick in demand from do-it-yourselfers (DIY) and big-box retailers during the pandemic. Housing weathered the storm much better than most anticipated, and the need for lumber has remained relatively constant. DIY demand has not decreased much as states reopen. Historic low mortgage rates have also pushed construction activity that has far surpassed sawmill capabilities in a country that’s housing needs are undersupplied. Trucking lanes changed as other industries felt the impact of the pandemic. The combination of all of these factors has disrupted the balance of an ordinarily reliable supply chain.
We also understand your concerns regarding product availability and inventory levels. Hayward Lumber has been supplying lumber and building materials to builders on the Central Coast for over 100 years. It’s with this experience and our longtime business relationships throughout the forest products industry that we can continue to provide the materials you need.
These unprecedented challenges also mean that planning and communicating with your salesperson is essential. We are managing inventory levels carefully, but we also don’t have endless quantities on hand. Therefore, preparation is crucial, and the best advice for keeping these disruptions from slowing down your construction project is to make your product decisions early and place your orders with plenty of lead times.
We want you to know that we continuously have product moving in-bound. We have rail cars and trucks of commodity lumber moving building materials towards our seven locations in California, but be patient as there may be spots where we are short on a particular dimension or panel. At times there may be a late truck, and we apologize for any delays. Our procurement team is working very closely with our suppliers, and they are communicating with them throughout the day for the most up to date information.
Even though there is a significant disruption to the lumber market, we can supply our customers with the building materials they need. We are also passing on business inquiries from less loyal customers, other lumberyards, and speculators trying to advantage themselves in an undersupplied market. We source our lumber and building materials with our faithful customers needs in mind, so they can work, keep their crews on the job site, and continue building amazing projects for their clients.
We sincerely appreciate your trust and value your business, and are honored to be able to serve you. If you have any questions, we want to hear from you. Please contact your salesperson or local manager. We want to help you succeed and keep your project on schedule. Thank you for being our customer!