Looming lumber shortage expected to bring record prices, European imports

Posted by Rumin Mann
March 11th, 2013

There’s no way North American stud lumber sawmills will be able to keep up with the recovering U.S. housing market, new research being compiled by the International Wood Markets Group shows.

The shortage of studs — boards used to frame walls in residential houses — is expected to lead to record lumber prices and will make construction lumber profitable enough that European sawmills will likely make inroads into North America, where a supercycle is shaping up for commodity lumber, Wood Markets president Russ Taylor said Friday.

Lumber prices today are high, having broken through the $400 US a thousand board feet barrier, but Taylor said this is just the beginning.

“Two or three years out is when we think it is really going to hit,” he said.

U.S. housing starts are expected to more than triple off their 2009 lows between now and 2017, when Taylor said they will hit 1.5 million starts a year. Starts are expected to reach 925,000 to 950,000 this year, indicating the lumber rally still has a long way to go, he said.

While all segments of the lumber industry are expected to benefit with the U.S. recovery, studs are going to be affected the most, Taylor said, because there are limited opportunities to increase production capacity.

Studs are generally made from logs cut to eight-foot lengths and are processed in mills designed to produce only two-by-four or two-by-six dimensions in that length. While a standard dimension lumber sawmill can produce studs, it usually means taking a more valuable piece of lumber and cutting it to the eight-foot length, something that may end up happening as the supercycle — which Taylor said is now underway — leads to supply shortages.

Click here to read the entire article

Comments are closed.