An unexpected rebound in wood product prices this month is boosting profits for Canadian forestry companies but leaving homeowners and buyers with the prospect of higher home and renovation costs in 2021.

Prices for lumber and wood panels are up in December due to strong housing markets and limited capacity to increase North American production following a seasonal softening of prices in October and November, said RBC Capital Markets analyst Paul Quinn.

B次元官网网址淎s we head into 2021, we have seen unprecedented pricing levels to close out 2020 with (lumber) prices moving higher following a pullback in October/November,B次元官网网址� said Quinn in a report.

B次元官网网址淲ith demand likely to get stronger as dealers get ready for what should be a very strong spring building season, we expect that prices will remain at a high level during the first half of the year.B次元官网网址�

Next year could be even brighter for producers than 2020, he said, adding that record high prices set last summer as COVID-19 forced people to work from home B次元官网网址� thus sparking interest in renovations or buying a bigger house B次元官网网址� will likely continue or be eclipsed in 2021.

The price volatility and shortage of supply of some wood products means headaches for homebuilders trying to take advantage of the current strong market for new houses that is expected to continue in 2021, said Kevin Lee, CEO of the Canadian Home BuildersB次元官网网址� Association.

B次元官网网址淥ur members price houses based on expected near-term prices for lumber and then, when they go up, it becomes very hard to operate,B次元官网网址� he said.

B次元官网网址淭hey went down a little bit through October but youB次元官网网址檙e still talking about lumber prices three or four times the prices from a year ago. And now theyB次元官网网址檝e escalated right back up again.B次元官网网址�

He says higher lumber prices this year have added as much as $30,000 to the construction cost of a typical 2,500-square-foot (232-square-metre) house in Canada.

Higher wood product costs havenB次元官网网址檛 affected the work volume for Shamrock Mountain Building Ltd., a home and renovation contractor that employs 14 staff split between Calgary and the ski resort community of Golden, B.C., according to owner Dale Higgins.

B次元官网网址淎ll you can do is pass it along. Obviously prices are going up, you just have to be honest about it,B次元官网网址� he said on Wednesday.

B次元官网网址淪ome people complain a little bit more about it B次元官网网址� (but) if theyB次元官网网址檙e getting multiple quotes, everyoneB次元官网网址檚 saying the same thing. ItB次元官网网址檚 not like just one person is charging 20 per cent more for lumber.B次元官网网址�

Higher prices are encouraging Western Forest Products Inc. of Vancouver to redirect logs harvested on the West Coast that might have previously been exported to Asia into its Canadian mills to make value-added products, said CEO Don Demens.

B次元官网网址淭he opportunity we have is to really move up the product value chain and increase our production,B次元官网网址� he said in an interview on Wednesday.

B次元官网网址淪ome of the logs on the coast were being exported into China. We can repatriate those logs into our sawmills and manufacture lumber products for customers in North America.B次元官网网址�

He said the company remains cautious about increasing spending, however, because of unknowns posed by the ongoing COVID-19 pandemic.

Shares in Western Forest Products closed up 7.5 per cent at $1.29 on Wednesday after RBC analysts raised their target price by 50 cents to $1.50 per share.

In a report, RBC cited strong wood product demand and the lower U.S. lumber import duties for its bullish rating.

In a new forecast out Tuesday, RBC raised its composite price estimate for lumber in 2021 to an average of US$575 per thousand board feet, up from US$475. Its average price is US$560 for this year.

It says western Canadian oriented strandboard, a type of panelling often used to clad new houses, is expected to average US$430 per thousand square feet in 2021, up from a previous estimate of US$305 and an average of US$420 in 2020.

Dan Healing, The Canadian Press

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