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Lumber Prices on the Rise

“Lumber prices are the highest they’ve ever been in the United States—let that sink in for a moment (Perfect Storm for Lumber Markets).

Looking back at 2017, we saw US lumber production grow with fiery intensity. This was cause for concern and a detailed analysis was conducted to forecast future consumption of softwood lumber in the five end-use categories (residential housing, repair & remodeling, non-residential construction, material handling and other). The forecast,“Future Suppliers of Softwood Lumber to the US Market – Supply and Demand Outlook 2017-2030“, was released in March of 2018 and indicated that the demand for softwood lumber will grow at an annual rate of 2.3% through 2030. Canadian imposed tariffs, insect infestations compromising US lumber and the recent growth in the residential housing market all play a role in chaos that is the US lumber market.

Canadian Tariffs

Since January of 2018, there is on average a 20.83% tariff imposed on Canadian lumber imports by the Trump administration. It is speculated by the Trump administration that Canadian leaders are subsidizing softwood lumber prices, also known as dumping, to underbid American competitors.  The failed attempt to settle the Trump administration claim that Canadian firms were selling lumber at unfair prices with the help of government subsidies did not end well. The claim was left unsettled and the US tariff was imposed. In return, Canadian firms may pass the burden of the tariff onto US buyers.

Insect Infestations

A species of bark beetle, the size of a grain of rice, has laid waste nearly 39.52 M acres of lodgepole pine forest in British Columbia. The mountain pine beetle, a species of bark beetle and the spruce beetle have riddled North American forests destroying trees at advantageous rates. The February 2018 report from Wood Market noted that lumber mills in British Columbia are either cutting shifts or shutting down due the impact of infestations.

Housing Growth

A five year forecast shows positive growth for the U.S. housing market(Wood Markets: More Record-Level Lumber Prices Expected in 2018 from U.S. Import Duties). The housing market has finally seen its long awaited demand from the millennial generation and now faces increased lumber costs that will in turn raise housing prices. In addition to residential contractors, industrial manufactures are subject to what seems to be never ceasing price increases on everything from 2x4s to OSB (oriented strand board) and plywood. If the escalations continue, we can anticipate that home prices will rise at an accelerated pace.

The housing market growth only exasperates the effects of Canadian tariffs and overall lumber shortage in the U.S.

Since the fall of 2017, First Class Packaging has taken efforts to notify our customers of the price escalations & will continue to do so.

» Read More First Class Packaging was acquired by Larson Packaging Company in July of 2020

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