Columnists, Darren Satsky, Lumber Market Report, V3I4

Lumber Prices Trend Lower

In spite of a drop in durable goods orders in May, factory demand has strengthened this year. Durable goods orders for the first five months this year has increased 2.8 percent.

Why does this matter?

Factory orders or business investment in new equipment indicates that the economy is growing. This is good for the job market and consumer confidence. Meanwhile, inflation is not strong enough for the central bank to raise interest rates too quickly.

This is a pretty good scenario. Just think if we get a business tax cut and some infrastructure spending.


Over the eight-week period of May and June, lumber prices declined across the board.

WSPF 2 by 4 #2 and better prices decreased approximately 8 percent over the previous eight weeks. ESPF 2 by 4 #2 and better prices declined approximately 3 percent over same time period. SYP 2 by 4 #2 prices fell dramatically over the time period, a decline of about 18 percent.

KD Western SPF studs were down approximately 8 percent, and Eastern SPF studs fell about 4 percent over the previous eight weeks. Treated SYP 2 by 4 prices were down about the same amount as the bright stock, 18 percent on average.


U.S. Secretary of Commerce Wilbur Ross announced the affirmative preliminary determination in the antidumping duty (ADD) investigation of softwood lumber from Canada.

The Commerce Department determined that exporters from Canada have sold softwood lumber to the United States at 4.59 to 7.72 percent less than fair value based on factual evidence provided by the interested parties.

Commerce will instruct U.S. Customs and Border Protection (CBP) to collect cash deposits from importers of softwood lumber from Canada based on these preliminary rates.

These preliminary ADD rates are in addition to the preliminary countervailing duty (CVD) rates that the Commerce Department assessed on softwood lumber on April 24, 2017. When combined the applicable duty, rates range from 17.41 to 30.88 percent.


For the time being, the Canadian mills have attempted to price countervailing and anti-dumping duties into the market. Any news of a negotiated settlement or a revised final determination will impact the market, but until then, the market will trade on fundamentals: supply and demand.

What should you do today? Approach the market as you would normally. Try to maintain sufficient inventory to meet expected orders. Once the ADD was announced, the market changed very little, due to the fact that higher prices had already been incorporated into pricing.

I think it was 2001, when the previous CVD and ADD were announced. It eventually led to the Softwood Lumber Agreement of 2006. That agreement lasted until 2015. Eventually, we will have an agreement with our most important lumber trading partner.

It just may take a little time.


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