USW Local 1-2017
Suite 100, 1777 3rd Avenue, Prince George, BC, V2L 3G7
Tel: 250.563.7771 | Toll-free: 1.800.565.3641 | Fax: 250.563.0274

USW Local 1-2017
Suite 100, 1777 3rd Avenue, Prince George, BC,
V2L 3G7

Phone Numbers
Tel: 250.563.7771
Toll-free: 1.800.565.3641 
Fax: 250.563.0274
E-mail:

USW Local 1-2017
Suite 100, 1777 3rd Avenue, Prince George, BC, V2L 3G7
Tel: 250.563.7771 | Toll-free: 1.800.565.3641 | Fax: 250.563.0274

USW Local 1-2017
Suite 100, 1777 3rd Avenue, Prince George, BC,
V2L 3G7

Phone Numbers
Tel: 250.563.7771
Toll-free: 1.800.565.3641 
Fax: 250.563.0274
E-mail:

Plants

Lumber Prices Projected to be Record Levels in 2018

Jan 1, 2018

A new WOOD MARKETS/FEA Five Year Softwood Lumber Forecast projects continued shifting markets and prices throughout 2018, due to US duties on Canadian Softwood Lumber exports.

Record level lumber prices are projected to continue, and reach even higher points over the next five years, while Canadian lumber production and exports to the US are predicted to slow due to the announcements of final countervailing and anti-dumping duties. Because of this, the projected demand for Softwood Lumber in the US may not be met. To meet this demand the US will need to increase their own production, and import from offshore, causing prices to raise to record levels. Due to these factors, and the increasing US housing markets, prices are projected to raise in 2018, and continue to hit record levels incrementally in 2019 and 2020. The report projects that the first major “supply gap” may occur in 2019. A supply gap will occur when the lumber readily available can not meet the US demand without further Canadian imports.

WOOD MARKETS/FEA releases forecasts for the lumber industry regularly, attempting to predict the trends of the coming 5 years – including supply, demand, prices, and mill operating rates for lumber, OSB, and plywood. The most recent report, WOOD MARKETS 2018 - The Solid Wood Products Outlook: 2018 to 2022, was released early this December. WOOD MARKETS/FEA successfully predicted prices to raise greatly in 2017, and expects further increasing prices in 2018.

Part of the process of generating the report is creating a cost curve analysis of several lumber producing regions in Canada. A timber supply availability map is cross-referenced with delivered log and operating costs to determine which regions will be impacted the most.

Here is a brief summary of some of the predicted regional trends:
(WOOD MARKETS/FEA, News Release: More Record-Level Lumber Prices Expected In 2018 From US Import Duties, Dec 15, 2017, URL: https://www.woodmarkets.com/news-release-record-level-lumber-prices-expected-2018-u-s-import-duties/ )

• As the import duties on Canadian lumber imports will give many US mills a substantial cost advantage, a surge of capacity expansions has already started and more are expected. This should allow American mills to increase their market share of its home market.

• From near 34 billion bf in 2017, total US output is forecast to increase by around 10 billion bf by 2022, depending on the mill capacity increases in the US This forecast production surge is considered to be a very aggressive and will be difficult to achieve, but it is considered possible given the improved competitive advantage of US mills as lumber prices rise.

• Canadian lumber production is expected to dip slightly in 2018 and potentially in 2019 from the impact of US import duties and tight timber supplies. Exports to China are forecast to increase slightly, but this will depend on lumber price levels as compared to the US price, net of import duties.

• The B.C. Interior timber harvest will drop as import duties marginalize some sawmills, as well as from the impact of lower output from uneconomic mountain pine beetle-killed timber.

• As a higher cost region in Canada, Eastern Canadian mills could have difficulties, at times, to absorb import duties when lumber prices soften. However, is it expected that by 2020 (and maybe sooner), more exports will be required to fill the expected US "supply gap".

• European structural softwood lumber imports are forecast to ramp up dramatically to take advantage of the pending supply gap, that should keep lumber prices at high levels. The magnitude of European softwood lumber exports to the US is difficult to predict, but higher prices will attract more volumes to the US

Brian O’Rourke, President USW Local 1-2017, explained, “This is good news for our Forest Industry. The challenge going forward will be the US lumber tariffs, log supplies which were impacted by the Mountain Pine Beetle, and unprecedented fires that burnt millions of hectors of forest lands. However, we remain optimistic, and believe the industry will, as in the, past recover from these challenges.”

Full details and further analysis can be found in the full report on the the WOOD MARKETS/FEA website:
https://www.woodmarkets.com/publication/5-year-outlook/outlook-2022