What’s this got to do with the price of wood in China?

At the beginning of the coronavirus pandemic back in April 2020, William Martin, a sound technician in Newburgh, found himself with a lot of time on his hands.

“Like many others, I guess, I was shut out of the workplace,” he said. “I didn’t know what was happening. So I stocked up on groceries, hunkered down on my property, and kept busy.”

He wasn’t alone. Numbers released by the Congressional Research Service for April 2020 showed the unemployment rate in America had soared to the highest number ever recorded since data collection began, 49 million unemployed Americans.

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There were many William Martins.

The story of lumber’s startling rise to a blazing-hot commodity begins just a month before. In March 2020 the price of lumber sank to a dismal $231 per 1000 board feet while the pandemic captured national headlines. New-home construction abruptly fell off. Supply chains behaved uncertainly, as industry attempted and failed to forecast future demand. 

For fear of contagion, sawmills were left idle. and the workers sent home. A surplus of lumber haunted the shelves of big=box construction supply stores across America, dragging the value of lumber underwater.

But then the price of lumber began its inexorable rise. By September 13 it had more than quadrupled, up to $971 per 1000 board feet. By May of this year it was at an unimaginable high of near $1700 per 1000 board foot. 

And so it was that many of those William Martins had started building.  

Decks. Pergolas. Sheds. Additions. Renovations.

The neglected lumber flew off the shelves.

Eastern White Pine. Loblolly, Longleaf, Shortleaf and Slash. Douglas fir.

These are the primary woods used in stick framing, a wood framing system that consists largely of two-by-fours, two-by-sixes, and two-by-eights.  Walls, a ceiling, a floor and roof rafters can be framed out of a pile of such sticks.

The economics of lumber

For more than 30 years Chris Neher has been the buyer for the Woodstock Building Supply Company, a family-operated lumberyard that has done business in Woodstock since 1925. He described that heady June of a year ago.

“I had never seen anything like it,” he said. “We had people lined up outside the gate. Socially distanced and all. And I didn’t even know most of them. And we don’t advertise.”

The supply chain for lumber works like this. Lumberyards purchase their product through distributors who are in turn supplied by sawmills. The sawmills do their business buying the felled trees themselves and converting them into various grades of lumber.  (A more romantic explanation can be demonstrated by watching the opening credits of any Twin Peaks episode. )

The abrupt turnaround in demand caught the supply chain flatfooted. The massive circular saws of the sawmills would have to be set spinning again, and for that they were sorely understaffed. The pandemic, then like now, had not gone away, and even if the workers could be recalled in numbers approaching pre-pandemic levels, how the business of manufacturing boards could be operated safely to avoid liability should the virus spread among its workers posed a conundrum.

Beyond the basic economics of liability there still remained the science of producing lumber for construction purposes. The felled logs are first brought to the mill. Workers edge the wood to remove defects, trim the ends to square, and cut them to uniform lengths. Those are the standard cuts of lumber with which most of us are familiar. 

After all that, there still remains a period of drying. Green wood is full of water. It takes 45 to 60 days to air-dry wood for use in building applications. Some forward-thinking operations dry the wood in a kiln, and the wood is stamped in ink accordingly.

There’s still the shipping. Trains. Boats. Big rigs. Competition for available shipping containers becomes an issue.

At each point along this supply chain, bottlenecks start to crop up. And prices rise accordingly.

By August 2020 demand outpaced supply.

A whipsaw year

“I had injured my back and went in for surgery in May,” Scott Wannamaker, who works at the order counter of the Woodstock Lumberyard told me. “I was out recuperating for three  months. I came back in August. And the entire parking lot was empty! No people. No wood. I was like, Do I still have a job? I thought they were shutting down!”

They weren’t.

“The pipeline was cleaned out pretty quickly,” Neher explained. “The first bellwether, of where we were going, was that the price of pressure treated wood had spiked.  Then it evolved to other products like plywood. Subflooring  rose to over a hundred dollars a sheet!”

A bellwether, by the way, is a castrated sheep around whose neck a bell is hung. That sheep leads all the other sheep in the flock.

“The trajectory was up for a year,” Neher continued, “with no corrections. Then a hard fall. First, framing lumber came down. Then, plywood. But it’s hard. Even the suppliers can’t see the big picture.”

Those astronomical prices had caused demand to crater, at least among the amateurs. Inventory was once again piling up as people put aside projects in order to wait until prices were more came downc.

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After a whipsaw year spent chasing inventory, the market had cooled. 

In June of 2021, Federal Reserve chairman Jerome Powell chimed in. “The thought is that prices like that, that have moved up really quickly because of shortages and bottlenecks and the like, they should stop going up,” said Powell. “And at some point, they, in some cases, should actually go down. And we did see that in the case of lumber.” 

But what does this have to do with the price of wood in China?

The U.S. sells and ships timber to China because the cost of labor is so much cheaper there. China then exports finished wood products right back. A neat workaround for avoiding paying American workers a living wage. 

Furniture made cheaper. A desk is still a desk, after all.

The United States is the largest wood harvester of them all, followed by Russia.

As prices begin to stabilize, the professional carpenters are breathing more easily. They’re telling jokes.

Big-box banter

Scott Wannamaker and friend. The price of wood is deer. (Photo by Rokosz Most)

Just below the stairs, outside the Woodstock Lumberyard order office, they rag on the big-box stores. Stephen Johnson, owner of NorthernLight Sauna, comments upon the big-box wood business:

“Sure. If you want to build a crooked house!”

No malice is intended. It’s just relaxed bantering.

When the rush of contractors subsides, Scott Wannamaker walks across the gravel pathway. A doe with large black eyes and vigilant ears waits for him. They know each other.

“There’s another one now,” Wannamaker says. “She’ll come right into the shop looking for treats. She walks right in like she owns the place when she hears me shaking the treats.”

Nature and business go hand in hand in Woodstock.

Lumber accounts for about one percent of the total global GDP. That’s about 600 billion dollars.

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