Sawmill owners raked in huge profits when lumber prices shot up this spring.
Companies that saw logs into two-by-fours and manufacture wood panels, including West Fraser Timber Co. and Canfor Corp. , reported second-quarter profits this week that topped earnings totals from their best years thanks to the pandemic forest-product frenzy.
Lumber prices, which had already broken records last summer, spiked during the spring quarter to more than twice their pre-pandemic high. Budgets were busted from apartment complexes down to garden planters. Wood costs threatened the housing boom and became central to the debate over whether runaway inflation was brewing or high prices were temporary and would ease as the economy moved further from lockdown.
Though prices have dropped by more than 60% since May, when futures hit $1,711.20 per thousand board feet, lumber remains nearly as expensive as it ever was before the lockdowns. Futures for September delivery settled Thursday at $621.90.
Like many businesses, sawyers have contended with higher transportation costs, wages and energy bills. Crucially, though, the glut of mill-ready pine trees in the South kept log prices depressed and mill profit margins wide in the continent’s most prolific lumber-producing region.