Declining Lumber Prices Warn of Economic Slowdown in Pacific Northwest Region

SEATTLE (Scrap Monster): The Pacific Northwest Timber industry faces threat of economic slowdown, mainly on the back of continuously falling lumber prices. The lumber prices have witnessed rapid decline since May last year. However, industry participants foresee growth in the longer term.

According to Nasdaq commodities data, the price of Douglas fir plummeted to $390 per thousand board feet, significantly lower when compared with the peak of $582 per thousand board feet reported in May 2018. The slowness is considered as a correction from the mid-2018 historic spike in lumber prices and is likely to extend into 2020. However, forecasts by experts see potential growth prospects in the years after that.

The imposition of hefty tariffs on Canadian wood imports, forced these companies to start investing in the U.S. Many of these companies have expanded wood processing in the U.S. South by investing in new sawmills. The increased investments in the U.S. Southern region are likely to make Pacific Northwest lumber less competitive.

One needs to keep a close watch on U.S. housing starts. The figures suggest gradual slowdown in U.S. housing construction. The housing starts and building permits have registered decline in 2019, when matched with the prior year. The U.S. Census Bureau data suggests 1.4% decline in new home construction building permits. Also, construction of new homes and apartments recorded almost 8% decline in January this year.