{"id":97917,"date":"2026-02-10T07:20:13","date_gmt":"2026-02-10T07:20:13","guid":{"rendered":"https:\/\/www.timberindustrynews.com\/forecast-north-american-lumber-market-adjusts-to-lower-operating-capacity\/"},"modified":"2026-02-10T07:20:13","modified_gmt":"2026-02-10T07:20:13","slug":"forecast-north-american-lumber-market-adjusts-to-lower-operating-capacity","status":"publish","type":"post","link":"https:\/\/www.timberindustrynews.com\/ro\/forecast-north-american-lumber-market-adjusts-to-lower-operating-capacity\/","title":{"rendered":"Forecast: North American lumber market adjusts to lower operating capacity"},"content":{"rendered":"

Another difficult year has concluded for the North American wood products industry. Demand failed to meet expectations as affordability pressures persisted, with inflation and interest rates remaining elevated. At the same time, uncertainty increased sharply due to trade tensions and a prolonged government shutdown. Mill closures continued in response to sustained market weakness, though at a slower pace than in 2024. Confidence across the building materials sector and the broader forest products industry remains at its lowest level since the Global Financial Crisis.<\/p>\n

Forecasting in a policy-driven environment has proven difficult. While some uncertainty has eased, many questions remain due to ongoing trade negotiations, elevated recession risks, efforts by the current administration to revive homebuilding, and continued pessimism in lumber and panel markets.<\/p>\n

Below are five key expectations shaping the North American wood products market in 2026.<\/p>\n

1. Demand will stabilise across most wood products<\/strong><\/p>\n

Last year\u2019s expectation of a demand rebound did not materialise. Although interest rates declined and the US avoided a recession, affordability pressures combined with heightened trade-related uncertainty weighed heavily on home buying and construction activity.<\/p>\n

Some of this uncertainty is expected to ease in 2026 as additional trade agreements are reached and some tariffs are rolled back, including the postponement of further tariff increases on furniture, cabinets and vanities announced on December 31.<\/p>\n

<\/a>Interest rates are expected to continue declining as inflation cools and the Federal Reserve shifts further toward addressing labour market uncertainty. Additional fiscal stimulus is anticipated in the first half of the year following the passage of the One Big Beautiful Bill (OBBB), which will result in substantial tax refunds reaching households. The White House has also announced plans to purchase mortgage-backed securities to help lower mortgage rates, alongside other initiatives aimed at supporting builders.<\/p>\n

Residential construction, which accounts for roughly 70\u201380% of North American wood products demand, is expected to see modest improvement. Even limited gains in affordability should help stabilise the single-family market after an estimated 8\u201310% decline in housing starts last year. Multifamily construction is also expected to remain supportive as financing costs ease and zoning reforms encourage higher-density housing.<\/p>\n

Home improvement activity is expected to strengthen further. Indicators suggest renewed momentum as real disposable income remains stable and lower short-term interest rates support increased use of home equity lines of credit. Significant pent-up demand remains in this segment and may be released as inflation and employment conditions become clearer later in the year.<\/p>\n

While demand will vary by product, overall US wood products consumption is expected to remain flat in 2026. Structural panel markets are likely to perform relatively better, while non-structural panels may remain under pressure due to weaker housing completions and reduced domestic furniture and cabinet production. Losses from 2025 are expected to pause, setting the stage for a potential reacceleration later in the year and stronger growth in 2027.<\/p>\n

2. Softwood lumber capacity losses will exceed 1 BBF<\/strong><\/p>\n

Capacity rationalisation has been a persistent feature of the softwood lumber market in recent years.<\/a> Operable capacity declined by approximately 0.7 BBF in both 2024 and 2025. While earlier reductions were concentrated in British Columbia, closures have increasingly affected southern yellow pine operations in the US South amid weak market conditions and deep price discounts.<\/p>\n

These closures reflect several pressures, including declining demand since 2021, compressed margins as prices returned to pre-pandemic levels, structural fibre constraints in British Columbia, rising lumber duties, and the addition of 10% tariffs.<\/p>\n

Further closures are expected in 2026. North American operable capacity is projected to fall by approximately 1.3 BBF as both SYP and SPF production declines. A drop of this magnitude has not occurred since 2010, near the bottom of the Global Financial Crisis. Capacity rationalisation will remain a key factor in rebalancing the market.<\/p>\n

3. Lumber duties are likely to fall to 15\u201320% after AR7<\/strong><\/p>\n

High duties and tariffs have been a central market driver since early 2025. With the expiration of the last Softwood Lumber Agreement, record duties have reshaped supply dynamics. Many Canadian sawmills remain cash-negative, with FOB prices below US$500\/MBF.<\/p>\n

A new Softwood Lumber Agreement appears unlikely given upcoming USMCA reviews and renewed trade tensions. A new round of countervailing and antidumping duties is expected following the seventh administrative review later this year.<\/p>\n

Preliminary AR7 results are expected in the first quarter. Current analysis suggests antidumping duties could be reduced significantly as Canadian log costs declined during the reference period while lumber prices remained relatively stable. Assuming countervailing duties near 10%, combined duties are expected to settle in the 15\u201320% range later in 2026.<\/p>\n

Despite this potential relief, 10% Section 232 tariffs imposed in October are expected to remain in place, leaving Canadian producers under continued financial pressure. Recent trade threats further highlight the risks surrounding this outlook.<\/p>\n

4. Brazilian panel imports are expected to decline sharply<\/strong><\/p>\n

Wood panels were excluded from the October Section 232 tariffs applied to dimensional lumber and logs and are instead subject to country-specific tariffs. Imports from Brazil face a combined tariff rate of 50%.<\/p>\n

In the first ten months of 2025, Brazil accounted for 48% of US plywood imports and 57% of MDF imports. Assuming tariffs remain in place through much of 2026, imports from Brazil are expected to decline substantially. While some supply may be replaced by imports from other countries, overall panel imports are likely to fall, increasing reliance on domestic producers.<\/p>\n

The impact will be most pronounced in the US South and Northeast, where Brazilian panels are primarily imported. This is expected to support Southern plywood prices relative to Western plywood. Domestic mills are expected to benefit from stronger demand even if overall consumption remains subdued.<\/p>\n

Price upside is likely to remain limited due to competition from OSB and already elevated MDF prices. The wide price gap between particleboard and MDF is expected to persist.<\/p>\n

5. Wood product prices are expected to rise modestly<\/strong><\/p>\n

Capacity reductions combined with a modest demand recovery should support higher average prices across most wood product categories in 2026. Softwood lumber is expected to remain the most volatile segment due to elevated duties and ongoing supply adjustments.<\/p>\n

Structural panel markets are expected to follow a similar pattern, though OSB may underperform due to its higher exposure to new construction. Reduced Brazilian imports should provide some offsetting support for plywood markets.<\/p>\n

Particleboard and MDF prices are expected to remain relatively stable, as demand from new construction feeds through later in the building cycle.<\/p>\n

While pricing volatility may be contained by relatively low operating rates, continued policy uncertainty \u2014 particularly around US\u2013Canada trade relations \u2014 leaves scope for unexpected developments throughout the year.<\/p>","protected":false},"excerpt":{"rendered":"

Another difficult year has concluded for the North American wood products industry. Demand failed to meet expectations as affordability pressures persisted, with inflation and interest rates remaining elevated. 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