World Lumber prices on the rise, North American mills ramp up production

Rubber and Wood  |  2013-05-02 08:10:42   |   By

The lumber prices are riding high. The North American lumber mills are reported to have beefed up the production

TORONTO (Scrap Monster) : The lumber prices are riding high. The North American lumber mills are reported to have beefed up the production.

After several months of dismal figures, the US house starts have recently shown signs of recovery. The recently released statistics indicate that more homes are being constructed as the demand for new homes are seen increasing. With US housing market recovering, a strong rebound in North American lumber industry is very much on the cards.

The Chinese economy is expected to display an accelerated growth, according to experts. The demand for North American lumber has been at its peak. According to the data released by International Wood Markets Group, the North American lumber exports to China surged 17-fold to 3.5 billion board feet. The Chinese demand continues to remain strong as well. The demand growth in Asian countries has given a new life to the lumber industry worldwide.

The supply side is severely affected by the shortages caused by the drastic beetle invasion of Canadian pine trees. Studies show that the Emerald Ash Borer (EAB) is likely to massively hit the ash trees of Ontario in the next three to five years. As per government statistics, more than 50% of the commercial pines in the B.C are affected by beetle. The supply side constraints obviously have resulted in higher lumber prices.

The US Lumber prices are up by 45% in a year to almost eight-year highs. The rise in lumber prices has made the construction costs creep higher. The margins of home builders have drastically fallen. The home builders are reported to be operating in a very tight margin.

The mills in North America are reported to be operating in full swing to meet the increased domestic as well as overseas demand.

Russian lumber prices have soared 10% to 15% in the past six months. The exports of red pine and spruce from Eastern Russia to China witnessed sharp rise during the period.