Lum­ber prices catch fire in wake of tar­iffs

Ottawa Citizen - - FP OTTAWA - JEN SKERRITT

The lum­ber mar­ket is red-hot, with fu­tures ris­ing to another record on Tues­day thanks to a con­flu­ence of im­port tar­iffs, trans­port bot­tle­necks and strong hous­ing de­mand.

Fu­tures traded as much as US$15 higher — the daily max­i­mum — to US$627.70 per 1,000 board feet on the Chicago Board of Trade. They’ve surged 68 per cent in the past 12 months, a big­ger gain than any of the raw ma­te­ri­als tracked by the Bloomberg Com­mod­ity Index.

Prices are likely to keep ris­ing, ac­cord­ing to an­a­lysts at Bloomberg In­tel­li­gence and much to the cha­grin of U.S. home­buy­ers.

The lum­ber rally picked up steam after the U.S. in Novem­ber im­posed av­er­age im­port du­ties of 21 per cent on Cana­dian ship­ments of tim­ber fol­low­ing a years-long trade dis­pute. While the move sup­ports U.S. pro­duc­ers, it’s bad news for builders, who get more than a quar­ter of their needs from north of the bor­der. For house con­struc­tion in par­tic­u­lar, the U.S. sim­ply doesn’t have enough sup­ply to meet de­mand. The Na­tional As­so­ci­a­tion of Home Builders, an Amer­i­can in­dus­try group, es­ti­mates the tar­iffs will in­crease the price of an av­er­age sin­gle-fam­ily home built in 2018 by US$1,360.

Lum­ber pro­duc­ers such as Can­for Corp. and West Fraser Tim­ber Co. also have piles of in­ven­tory stacked at their sawmills be­cause of a lack of trans­port ca­pac­ity. Canada is the big­gest soft­wood lum­ber ex­porter to the U.S., and the dis­rup­tion is con­tribut­ing to price gains. Pro­duc­ers may work through the back­log this year.

REG CLAY­TON/FILES

Rail de­lays are con­tribut­ing to price gains as Canada is the big­gest soft­wood lum­ber ex­porter to the U.S.

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