U.S. housing market may boost slumping lumber industry
Prices probably bottomed out two weeks ago, analyst says
Canadian softwood lumber prices have fallen substantially in the past nine months, but that long, steady decline should end soon, according to industry analyst Hakan Ekstrom.
The president of Seattle-based Wood Resources International said early signs of a resurgent U.S. housing market should boost the demand for Canadian wood.
“We probably reached the bottom on prices two weeks ago and can expect them to start moving up now,” he said.
Ekstrom noted approved U.S. building permits last month increased by nearly 12 per cent to an annual rate of 1.28 million housing units, the highest level since August 2007.
“People have been a little bit too careful about spending money for a new home, but that looks like it’s about to change.”
Industry publication Random Lengths said its weekly framing lumber composite price rose $10 US last week to $332 US for 1,000 board feet, compared with $371 US a year ago. Ekstrom said the low Canadian dollar helps Canadian lumber exporters, but noted that producers must pay export duties ranging from five to 15 per cent when lumber prices fall below $355 US.
His Wood Resource Quarterly report notes Canadian lumber exports rose 14 per cent during the first quarter of this year — including a 21 per cent increase to Japan, a 13 per cent increase to the U.S., and a 10 per cent spike in exports to China.
“If you’re a sawmill in B.C., I think you could be optimistic when you look ahead this year,” Ekstrom said.
“Prices in the U.S. are likely to go up, and China and Japan might be a little more interested in Canadian lumber, depending on exchange rates and freight costs.”
Council of Forest Industries representative Cam McAlpine attributed recent depressed lumber-price trends to a “glut of inventory.”
“We had somewhat stagnant demand in the United States, and growth in China has not been as robust as it was in the past,” he said.