Columnists, Darren Satsky, Lumber Market Report, V3I2

Chaotic Markets

Prices will move around a lot.” Did I really say that in the previous column? What an understatement! The catalyst for this volatility is the same—the failure to resolve the softwood lumber dispute and the uncertainty in the near future.


Lumber prices have been all over the map the last eight weeks. Although mostly higher, there have been some wild swings in a short period of time.

I noticed that in three consecutive weeks ending February 17, Western SPF 2 by 4 #2 prices escalated over $78 per thousand board feet, or about 25 percent. During the same period, Eastern SPF 2 by 4s gained over $40 per thousand board feet, or about 10 percent.

Since then prices have leveled off and in some cases shown double-digit declines. To put this move in perspective, the most these prices have changed in a month since 2014 is 7 percent.

While SPF changes began to slow, Southern Pine 2 by 4s #2 and 2 by 10s #2 continued to get more expensive. Through the week of February 24, prices of both
sizes increased about $12 per thousand. Since the beginning of the month, 2 by 4 SP prices have gained over $52 per thousand, and 2 by 10s have increased $54 per thousand, or 12 percent and 17 percent, respectively.

The surge in spruce has apparently made it much easier for domestic yellow pine producers to take and hold on to increases.

Panel prices and OSB have followed a similar path to lumber. Both have gained about 12 percent in a four-week period from January 27 through February 24.

The Dispute

In the ongoing dispute between the United States and Canada regarding softwood lumber products, the ITC (International Trade Commission) made a preliminary decision in
January and sided with domestic softwood producers. The DOC (Department of Commerce) will not decide the CVD (countervailing duty) until April 24.

At the same time, a decision about any anti-dumping retroactive tax will be rendered. The markets do not indicate how much duty will be imposed or when it will take effect.
It may be retroactive back 90 days.

The Outlook

For the time being, the mills have priced expected future duties between 20 to 30 percent, retroactively, into the market. Any news of the actual amounts will cause market changes.

The most influential news will be the amount of the preliminary duty and when it takes effect. A final determination may not be made until the end of May.

So, looks as if more uncertainty and more volatility are in store for the lumber market.


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