Columnists, Darren Satsky, Lumber Market Report, News, V4I2

Lumber Prices Making History

Lumber prices are making history. Why? Let’s take a look at the reasons and what the future holds.

As we offered in previous columns, improving macro-economic forces, supply disruptions, unexpected natural disasters, and unresolved trade policy with Canadian tariffs added to market volatility. With certainty in regard to lumber tariffs and buyers anticipating needs for strong housing demand this year, a clear path to historically high prices has emerged.

Despite a growing sense that strong prices will eventually abate, many mills, customers, and distributors see little
downside risk any time soon.


U.S. housing starts beat expectations in January, exceeding 1.33 million. Single- family starts increased 7.4 percent. In a sign of future production, permits closed in on 1.4 million. Growth in
demand for lumber will likely outstrip supply for the coming year.

Regarding the overall economy, the Federal Reserve Bank focused on inflation and strong economic growth in their last meeting, according to the minutes.


2 by 4 standard and #2 prices, Western SPF, showed impressive gains over the first eight weeks of the year. Although the pace slowed a little in February, it still tallied a 12 percent gain for the
period. Eastern SPF mirrored the gains in Western SPF.

Meanwhile, Western and Eastern SPF studs reversed course, and both gained 10 percent. 2 by 4 #2 SYP reported impressive gains over the period, rising over 15 percent. Treated SYP moved
higher, as expected, with the upward move in bright stock.


Final duties were in effect as of December 28, 2017. The U.S. Department of Commerce will collect as of this date. The combined CVD/AD duty paid by most Canadian lumber exporters will be
20.23 percent.

Up until now, Canadian exporters have been able to pass the added cost of the tariffs to consumers. Will it continue? It now looks like the answer is that the full costs will continue to be passed
on to consumers.

The U.S. Trade Representative appeared optimistic that NAFTA will be renegotiated with Canada and Mexico. However as of this writing, we are not hearing much news about a new SLA, the Softwood Lumber Agreement. It could be a year or two until an agreement is forged.


Distribution and wholesale inventories are still currently low. It does not appear that anyone has built a 90-day inventory. This indicates pent-up market demand, and hand-to-mouth buying. With elevated lumber prices, many customers are bumping up against their credit limits.

All these factors will likely keep the market at elevated prices going into the season and beyond. What should you do? Stay in the market and pay close attention to needs heading into spring.

Comments are closed.

Current Issue