But the forest fires in British Columbia as well as the tariff on lumber exports to the U.S. are being cited as factors in significant price increases on the Island this summer for plywood.
“It was a very bad situation in a very busy year,” said Giles Gallant, building supply manager for Home Hardware in North Rustico.
“All these factors made a big difference. Something that no one expected to see – an increase like this.”
Gallant said that the price of lumber is up by 25 per cent for spruce used for house framing, and 40 to 60 per cent for plywood. Gallant noted that the B.C. mills are major producers of plywood in Canada.
At the North Rustico store, a four-by-eight-foot, half-inch thick sheet of spruce plywood increased from $18.50 in February to $31.50. By comparison, on Wednesday the Kent Building Supplies in Charlottetown was selling the same type of board for $38.52 and Home Depot for $37.98.
Todd MacEwen, executive director of the Canadian Home Builders' Association of P.E.I., said that the B.C. fires and, in some cases, tariffs have reduced supply in Canada while the demand for lumber and plywood, especially on P.E.I., has remained strong due to housing construction.
“That just sort of filters down through the whole country. Most of what we get in Atlantic Canada comes from Ontario and Quebec. But demand in those markets would be greater than Atlantic Canada, so they’re meeting their own demand first. And again, it comes down to a supply and demand situation,” he said.
MacEwen said the market should eventually correct itself, but prices could still continue to climb over the next year or so.
Fred Bergman, senior policy analyst with the Atlantic Provinces Economic Council, agreed that the B.C. fires played a role in reducing the supply of lumber and plywood by closing mills and affecting shipping. Another factor affecting prices is that the mills were still paying fixed costs while shut down and losing revenue, he said.
With respect to tariffs, Bergman explained that even though Canadian companies don’t directly pay the tariff (or duty) on lumber exported to the U.S. (a maximum of 30.88 per cent of combined anti-dumping and countervailing duties), the tariff cost is still built into the price for Canadian consumers.
“The market is effectively priced into the duty,” he said.
Warren Doiron, president of New Homes Plus, buys lumber from the North Rustico store. His prices are adjusted every three or four months to account for costs. The last price adjustment was on May 1.
Extra costs associated with the price increases of lumber and plywood are being passed onto homeowners.
“We will be putting the price up again in September if the commodity doesn’t come down,” he said.
Despite the increase in the cost of plywood and lumber, MacEwen noted that homeowners of bigger, more expensive homes, are absorbing most of the costs.
“If somebody is putting down half a million for a home and they’re told that initial estimates compared to a final bill is more because of (plywood) and lumber increases, it’s not so much of a factor. But, in terms of middle-class builds, that certainly would start to play when the primary product sees an increase in price.”