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Carpenter Paul Richardson is photographed at a job site in Etobicoke, on Aug. 13, 2020.

Cole Burston/The Globe and Mail

Canada is facing a lumber shortage, with builders likely paying more for the material than ever before.

Anticipating a huge drop in demand at the onset of the pandemic, big Canadian forestry products companies such as West Fraser Timber Co. Ltd. and Canfor Corp. slashed output. But when lumber demand didn’t fall as much as expected, then bounced back far higher than anyone predicted, there were suddenly huge gaps in the supply chain.

“The consumption of lumber didn’t slow down anywhere near as much as production slowed down,” said Charles Gross, an analyst with Morningstar. “And it seems like it’s taken a little bit longer than any of us were expecting for the taps to be turned back on.”

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Jake Elstone, the owner of Queen Street Carpentry in St. Catharines, Ont., said it was around early July that he began to notice the supply issue, when his company was working on a project that needed pressure-treated wood.

“I wasn’t able to get the material that I needed anywhere in the city that I was working,” Mr. Elstone said. “And I’m talking about visiting and calling five or six or seven different stores within a 30-minute drive to have just a small amount of common material.”

These days, when he does go into a hardware store, he says the lumber racks are completely devoid of cedar and pressure-treated wood.

“Even the commercial suppliers are like, ‘Yeah, sorry. Good luck,‘” he said.

Brendan Charters, the development manager at Eurodale Developments, said he started to sense supply problems as early as Easter, about a month into the pandemic lockdowns. His employees would stop by stores to pick up orders and notice that there wasn’t a lot of lumber on the shelves.

In June, Mr. Charters started ordering materials in advance to avoid what he suspected would be a worsening supply issue in the summer.

“We know people are showing up at 6 a.m.,” he said. “At local stores, if a shipment comes in, it’s out the door and gone before you can get your hands on it.”

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Contractors say they’ve also seen prices increase exponentially in retail stores.

“There are price increases, for sure,” Mr. Charters said. “You have to understand that lumber is a commodity just the same as if you were to think about the gas station … [the prices] can fluctuate whenever the retailer wants to pass those cost changes on to the consumer.”

Paul Richardson, the owner of PTR Carpentry Inc. in Burlington, Ont., said that when he was working on a deck project a few weeks ago, he had to source his lumber from three different places because no one supplier had the amount he needed.

Even before the pandemic, the Canadian lumber supply chain was already in a tight spot. The industry had seen some disruptions because of the rail blockades in January and February.

As the pandemic intensified around the world in March and April, Canadian forestry companies hit the brakes, assuming that both the domestic and U.S. housing markets would crater. (About 30 per cent of Canadian lumber is shipped to the U.S.) By mid-April, Canfor’s Canadian operations were running at only 30-per-cent capacity.

“A huge, huge reduction – essentially unprecedented,” said Morningstar’s Mr. Gross of the production cutbacks. “I don’t think there’s been that rapid of a pulldown in operating capacity, even going back to the global financial crisis.”

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Nobody predicted how resilient the housing markets would prove to be in both Canada and the U.S., even in the midst of a once-in-a-century pandemic.

For one thing, U.S. housing starts for single-family homes, which are lumber-intensive, performed much better than expected.

And few people foresaw how people would embrace home renovations during the lockdowns.

“As people were working from home, we saw a massive surge in home renovation projects. People redoing their kitchens, fencing, putting up a new deck, fixing the bathroom,” said Derek Nighbor, CEO of the Forest Products Association of Canada.

“We just haven’t been able to catch up.”

Mr. Nighbor said demand for lumber for renovations has been especially strong in U.S. cities such as Jacksonville, Fla., and Nashville. And while the pace of work would typically slow down in both cities during the hot summer months, that hasn’t happened this year.

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The brisk demand and short supply across North America has propelled lumber prices to record highs. On Friday, lumber futures closed at US$729.10 per thousand board feet on the Chicago Mercantile Exchange, up 80 per cent this year.

While Canfor and West Fraser are both ramping up their sawmills again, the supply isn’t expected to normalize until around the end of September.

But with COVID-19 still raging, making even a short-term call on the market is tricky.

“Uncertainty abounds right now,” Mr. Nighbor said.

Anyone planning renovation projects this summer, Mr. Charters said, should reach out to secure prices and stock a few weeks before they actually need it.

“If you call today and expect material tomorrow, you’re probably gonna be disappointed with what you’re gonna get or not get,” he said.

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