CALGARY — Analysts say there's little immediate relief in store for Canadian home renovators and builders despite a slight recent softening in the pace of orders for forest products.

In a note, RBC analyst Paul Quinn says that while prices will likely fall from current record high levels, suggestions that lumber and oriented strand board (OSB) building panels are set to tumble are "greatly exaggerated."

Quinn points out that earnings reports from major building supply retailers Lowe's and Home Depot this week show huge increases in sales in the first quarter and they both indicated lumber continues to fly off the shelves in both Canada and the United States.

Home Depot reported comparable U.S. sales in the first two weeks of May that were 30 per cent higher than the two-year average and Lowe's said it hasn't seen any slowdown in May compared with robust sales in April.

Earlier this week, CIBC reported that a lumber composite price from industry trade magazine Random Lengths had jumped by one per cent to a record high of US$1,508 per thousand board feet, while Western SPF (spruce, pine, fir) lumber prices were unchanged from the previous week's record high of US$1,630.

It says, however, there's been a slowdown in the pace of new orders as buyers grow wary of risk in view of declining SPF futures prices and mills work on filling orders for delivery deep into next month.

OSB panel prices, meanwhile, were reported to have jumped 1.6 per cent in the north central region to a record US$1,275 per thousand square feet, an increase of almost 350 per cent in 12 months.

"While prices are unlikely to remain at these lofty levels, tales of lumber/OSB's demise seem greatly exaggerated," said Quinn in his report.

"In our view, continued demand strength and a limited ability for the industry to increase production are likely to result in a tight supply-demand balance over the short-to-medium term. This should support pricing well above historical levels."

This report by The Canadian Press was first published May 21, 2021.

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