Lumber Prices to Hit New Record Levels in 2018

SEATTLE (Scrap Monster):  The new report released by the Vancouver, BC-based Forest Economic Advisors (FEA) forecasts much higher lumber prices in 2018. The ‘WOOD MARKETS 2018- The Solid Wood Products Outlook: 2018 to 2022’ released this week states that lumber prices are likely to touch higher records during next year.

The five-year forecast says that the lumber market and prices are expected to remain volatile, on account of the ongoing duties imposed on Canadian lumber exports to the US. The preliminary duties imposed in 2017 have led to sharp rise in lumber prices. The trend is expected to continue in 2018. The similar report released last year had rightly predicted the prevailing lumber market conditions. This year’s report foresees further chaos and chances of lumber prices touching new record highs in 2018.

The Canadian lumber production and the exports of Canadian lumber to the US are expected to decline in 2018, mainly due to the recent announcement of final countervailing and anti-dumping duties on lumber exported from Canada into the US, with the exception of a few of the Atlantic provinces. As a result, the lumber prices which are already near record levels to hit even higher points during the course of next five years. The Canadian lumber companies plan to find new markets for their lumber, including Far East locations.

The US, by restricting Canadian lumber exports via import duties, may find it difficult to find lumber supplies to meet the projected demand. The reduction in import volumes has to be balance with imports from the world elsewhere. Alternatively, the US mills need to achieve major upgrades in lumber capacities. Until the US is able to ensure steady and cheap supply of lumber through alternative channels, the prices are likely to remain volatile, the report notes.

According to the report, the B.C interior timber harvest is likely to witness huge drop. The tight timber supplies coupled with US duties will result in significant drop in Canadian lumber production in 2018 and 2019. The lumber exports to China are forecast to increase slightly during the forecast period. Meantime, the US lumber output is projected to increase from the level of 34 billion bf in 2017 to nearly 44 billion bf by 2022, mainly on account of projected US mill capacity expansions.

The positive outlook for the US housing market until 2022 will also help boost the lumber prices, the report said.