Lumber Slips From One-Year High

Lumber prices slipped below $630 per thousand board feet, after reaching nearly one-year high of $640, as sawmill capacity remained subdued amid changing trade flows. High borrowing and labor costs weighed on the housing market, dampening construction lumber demand as sawmill capacity contracted 6% from a year earlier and production declines. China's reopening to American logs after the removal of pest-control restrictions has redirected more US timber exports toward the Chinese market. In Washington, lawmakers are seeking measures that would encourage processed hardwood lumber exports rather than raw log shipments, arguing that exporting unprocessed timber further weakens domestic supply chains and employment. Meanwhile, Canada is intensifying efforts to have the US remove softwood lumber tariffs, with British Columbia Premier David Eby arguing that cumulative duties have forced mills to curtail production or shut down.

Lumber prices slipped below $640 per thousand board feet after reaching a two-week high of $627 on July 8th, as sawmill capacity remained subdued amid changing trade flows. US sawmill output declined for a second consecutive quarter, while production capacity fell 6% from a year earlier. American logs are pouring into China after lifting its pest-control ban, while US lawmakers push for policies favoring hardwood lumber exports over raw logs, arguing that raw material shipments reduce domestic feedstock and displace workers, which contributed to a 48.3% drop in lumber output since 2018. High borrowing and labor costs are also weighing on the housing market, dampening construction lumber demand. Canada is simultaneously urging the US to lift softwood lumber tariffs, with Premier David Eby calling on Ottawa to treat the dispute as a national priority, arguing that cumulative duties have forced mills, particularly in British Columbia, to scale back or shut down.

Lumber prices rebounded to above $620 per thousand board feet, as supply tightened faster than demand. US sawmill output declined for a second consecutive quarter, while production capacity fell 6% from a year earlier. Although lumber prices rose 6.1% from the previous quarter as producers attempted to capitalize, they remained 3.8% below year-earlier levels amid subdued buyer activity. At the same time, British Columbia, Canada's largest exporting province, seeks to expand shipments to China as higher US import costs for Canadian softwood lumber reshaped trade flows. Meanwhile, the US maintained antidumping and countervailing duty orders on certain wood products and renewed trade measures on Chinese wood-related imports effective June 24, citing the need to “quarantine forest pests”. On the demand side, Canadian lumber exports to Japan fell 27%, while elevated borrowing costs, higher labor costs, and a weaker housing market continued to curb demand for construction lumber.