{"id":76953,"date":"2019-01-14T11:03:55","date_gmt":"2019-01-14T11:03:55","guid":{"rendered":"https:\/\/tin.happy-projects.ro\/lumber-market-north-america-forecast-go-2019-along-rise-prices\/"},"modified":"2025-09-19T08:49:43","modified_gmt":"2025-09-19T08:49:43","slug":"lumber-market-north-america-forecast-go-2019-along-rise-prices","status":"publish","type":"post","link":"https:\/\/www.timberindustrynews.com\/ro\/lumber-market-north-america-forecast-go-2019-along-rise-prices\/","title":{"rendered":"Lumber market in North America forecast to go up in 2019, along with rise in prices"},"content":{"rendered":"
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Growth in U.S. domestic softwood lumber consumption is expected to continue next year and well into 2020 as the U.S. economic recovery (and particularly housing) builds momentum. While there are mainly supply-side constraints to a rapid ramping-up of the housing construction industry\u2019s building capacity, the demand is expected to grow slowly but steadily. U.S. softwood lumber consumption is expected to approach 52 billion bf in 2019 and 55 billion bf in 2020.<\/em><\/p>\n

Canadian consumption has remained positive in every quarter since 2015, but our forecast is not as robust as it once was: with high home prices limiting demand for new housing, we estimate Canadian consumption growth at just 3.3 per cent in 2018, and forecast 2.5 per cent growth in 2019 and 3.3 per cent in 2020. R&R markets will benefit from years of strong home sales as Canada\u2019s manufacturing sector is bolstered by weakness in the Canadian dollar.<\/span><\/p>\n

Offshore imports grew at an average year-over-year rate of 44 per cent in the past four quarters. However, recent price declines have slowed growth from 69 per cent year-over-year in Q4\/2017 to 22 per cent in Q3\/2018, and an estimated 13 per cent in Q4\/2018. A decent growth is expected through the forecast period as rising U.S. consumption and capacity limitations in Canada \u2013 as well as improving prices and a strong U.S. dollar \u2013 open the door to more European imports in 2019 and beyond; this will be helped particularly by the massive spruce bark-beetle salvage program.<\/p>\n

North American supply<\/strong><\/p>\n

North American production has grown steadily since 2009 as a result of increasing demand in U.S. housing and all other end-use segments. Higher prices in the U.S. limited exports for both American and Canadian companies during the first three quarters of 2018, and this has led to a fifth consecutive year of declining net trade. Reduced exports and rising output by North American mills caused more shipments to be directed to the U.S. In addition, there was another significant rise in offshore imports to meet U.S. demand. With more than 50 Canadian-owned mills situated in the U.S., and amid Canadian import duties and stronger prices in 2018, a flurry of capex projects has continued to expand existing capacity. As well, there is a steady stream of announcements for greenfield\/brownfield mill projects that will add up to four billion board feet of new lumber capacity in the U.S. South.<\/p>\n

Canadian lumber production should reach 28.3 billion bf in 2018 (a level similar to 2017). Lumber output from the B.C. Interior peaked in 2016 at 12 billion bf, yet it is still expected that three to five sawmills (or equivalent volume) there could close by 2025 (timing unknown). Ontario and Quebec also continue to face longer-term timber supply issues as a result of legislated reductions in annual allowable cuts on government lands. In addition, the closure of several pulp and newsprint mills, with additional shuts expected, has negatively impacted chip prices in some regions. Nonetheless, lumber production continues to rebound in Eastern Canada from the lows of 2009. Eastern lumber output (including in the Atlantic provinces) should reach almost 11 billion bf in 2018 as a result of favourable U.S. market prices and strong Canadian demand. In 2019-20, these levels should rise slightly as the bite of U.S. import duties is felt (except in Nova Scotia) and the impact of lower Canadian housing starts kicks in.<\/p>\n

Canadian exports to the U.S. were 14.3 billion bf in 2017 and slightly lower (14.2 billion bf) in 2018; this was despite record-high prices in the earlier part of the year.<\/p>\n

U.S. West output remained in a narrow range of 13.5-14 billion bf between 2013 and 2017, with each region (West Coast, Inland, California Redwood) showing flat production trends. Then, in 2017, a reduction in Canadian imports to the U.S., resulting from import duties, led U.S. West lumber higher \u2013 from 2017\u2019s 13.9 billion bf to 14.6 billion bf in 2018. By 2020, lumber production in the region could reach as high as 16 billion bf. This is an aggressive forecast that is subject to both log availability and suitable log\/lumber prices.<\/p>\n

U.S. South lumber output will continue to expand, possibly moving from 18.3 billion bf in 2017 to over 19 billion bf in 2018 to 21.5 billion bf by 2020. The U.S. South has large volumes of incremental timber fuelling new sawmill expansions and greenfield announcements, and still enjoys some of the lowest delivered log prices, the highest lumber prices, and the best sawmill margins in North America. With restrictive import duties on Canadian lumber now in place and prevailing low timber prices, U.S. South sawmills will continue to benefit.<\/p>\n

Canadian offshore lumber exports will slip by nine per cent in 2018 as a result of high U.S. lumber prices that are diverting Canadian lumber from offshore markets to the U.S. Furthermore, U.S. offshore exports have decreased this year, especially to China because of the U.S.-China tariff war. Fortunately, higher demand for southern yellow pine from the Caribbean and China should prevent any serious decline in offshore exports.<\/p>\n

U.S. lumber prices<\/strong><\/p>\n

Demand has grown faster than capacity in the past several years, leading the North American demand\/capacity ratio to hit 89 per cent in 2017-18. With end-use market activity continuing to grind higher in 2019, the demand on North American mills is expected to grow steadily.<\/p>\n

U.S. lumber prices will be lower in 2019 than 2018. There are several reasons for this, but none that are considered cyclical; therefore, a repeat of the short-term supply disruptions that caused prices to spike is not expected. Following 2018\u2019s record-high prices, an aggressive supply response by the industry that should help prices to remain strong by historical standards is expected. Prices on average in 2019 could be in line with 2017\u2019s strong showing.
\nIn 2020, pricing will resume its upward trend. This prognostication is predicated on several factors, including ongoing consumption improvements. Overall, we foresee lumber prices rising again in 2020. Volatility will persist over the next two years for a range of reasons, such as:<\/p>\n