#21 - Lumber Mania
Price of lumber has skyrocketed during COVID-19 📈
Lockdown boredom and excessive cash stimulus in the U.S. inspired people to buy new homes, renovate old ones and work on DIY projects.
That caused severe lumber shortages as U.S. mills were caught off guard with almost non-existent inventories 😱
40% of North American sawmill capacity shut down in 2020 because they feared a COVID-19 slowdown 👉 yeah, it never happened.
Reclaimed lumber is popular for many reasons: it contributes to green buildings, looks unique and can be stronger than newly-cut wood.
See MaterialsXchange for an example of an online lumber marketplace.
Sky-high lumber prices create market gaps for other alternative building materials, such as steel, composites, concrete and even plastics.
Build lumber tracking dashboards 📊
Track prices of stock lumber at local stores.
Track availability of lumber at local stores.
Track prices of wooden consumer products.
How to launch
Build a web dashboard tracking lumber availability:
Start with local hardware stores in your area.
Negotiate a deal with the stores which gives you access to their inventory data, at least on a rough level. In turn you promote their lumber products when they have availability.
Add locations, prices, inventory levels, lumber types...
Add more stores over time.
For the customer the benefit is knowing where to drive to buy the lumber → time and effort saved.
Spread the word with contractors, hobbyists, anyone who needs lumber. Drive traffic to your website.
Monetize with ads or with a freemium model (partly restricted access to some data or a free trial period).
Sales of Trex’s composite decking alternative were accelerating already pre-pandemic:
High lumber prices have helped further supercharge Trex’s growth. The company’s stock price has vaulted 767% in the last 5 years 💵
As long as the lumber prices remain high, consumers are willing to consider other alternative materials to their DIY projects.
Stock prices of lumber-related companies have soared in the last 12 months:
Alts to wood products
Since then the price has come down to about $1,300/MBF, which is still ultra-high when compared to historical prices during 2000s.
Raising lumber prices have not resulted in higher profits for timber growers. A large surplus of trees remain. 🌲Sawmills are the real bottleneck.
But sawmills are also starting to catch up: 1.4 billion board feet of capacity was added during the last 12 months.
The craze for lumber is showing signs of slowing down in late May 2021. Future prices fell close to $1,200. 📉
General consensus is that the prices will hold up for another 12-18 months so there’s still ample time to capitalize on this trend.
A Look at Lumber Prices From the Supply Side - An insider’s story of how the situation evolved to record-breaking lumber prices 🪵
Lumber Bubble - Soaring lumber markets are inspiring TikTok video creators.
There’s a historical lumber price hike going on.
That creates a lot of opportunities for solutions that solve either the high price or availability problems: alternative building materials, tracking lumber availability, marketplaces for lumber products and smaller houses.
It’s hard to say how long the prices will stay up but the limited capacity of mills and shortage in housing are problems that are not solved overnight.
Thanks for reading. See you next week!