Please find below the results of Madison’s Lumber Reporter‘s investigation into questions regarding a possible difference between North American softwood lumber prices into USA and those domestically within Canada, in view of the latest US softwood lumber duty.
OVERVIEW OF CURRENT NORTH AMERICAN LUMBER MARKET: 1Q 2019
The question at hand:
· is there apparently a price difference between Canadian sales to domestic markets and sales to US export markets.
THE SHORT UPDATE to the basic question is: unchanged from our previous report. Further details below.
1Q 2019 UPDATE: North American Softwood Lumber Market
The North American lumber manufacturing industry settled 2018 in an orderly manner. A small spate of late-season bulk-buying by intrepid exporters headed back home to Spring Break kept prices from absolutely tanking more even than they did.
By the end of 2018 lumber prices were extremely soft, having soared to magnificent highs during summer (see graph below and table at bottom).
North America Benchmark Construction Framing Softwood Lumber Prices: 2017 to Feb 2019
As usual for year-end, producers and secondary suppliers were more focussed on getting lumber yards emptied than quibbling over price for the remaining few sticks on hand. At sawmills, log yards were filled to abundance. Lumber sellers simply refused to quote anything for 2019, so no one knew where first week January prices would start.
Taking extended curtailments and downtime, sawmills ended 2018 in a good position to boost very soft prices for the first entry in their 2019 order book.
British Columbia Coastal Log vs Manufactured Lumber Prices
Douglas fir Gang Log vs Douglas fir green 2×4 Construction Framing Lumber Prices: to Dec 2018
Due to the extended US government furlough recently, there is currently a time-lag in the US data releases. Madison’s will be able to provide those important data set updates of Canadian and US log exports when sources next release the data.
For now, as a useful benchmark, we provide Madison’s new proprietary British Columbia coast log prices against our traditional lumber price data for the same fibre supply basket:
British Columbia Coastal Log vs Manufactured Lumber Prices
Hem-Bal Gang Log vs Hem/Fir Coast 2×4 Construction Framing Lumber Prices: to Dec 2018
HISTORICAL vs RECENT & CURRENT SOFTWOOD LUMBER PRICES: Jan 2019
EXPLANATION OF RESPONSES FROM SOURCES – SPECIFIC POINTS
- Producers skipped maintenance and otherwise breaks at 2017 year-end so took ample time for worker time off and curtailments across most regions of North American as 2018 closed.
- Taken over the entire year of 2018 the sawmills made out very well overall, both with volumes sold and prices, so were unwilling to go below a certain price floor.
- As such the spread – or rather the dynamic of the spread – between producer and wholesaler prices, has changed from our previous reports on this subject. Once the supply chain replenishes, a more stable price will be determined. For this winter, all operators point to difficulty getting commodities transported on the railways, putting upward pressure on prices as already-depleted inventories force end-users to buy now despite strengthening prices.
IN SUMMARY:A glimpse of the near-term future for US home building is here: “https://madisonsreport.com/2019/02/11/us-housing-starts-will-decide-how-long-lumber-rally-lasts-barrons/”
RESULTS
As the North America forest products supply chain ended 2018 in a favourable position, expectations for building season 2019 are reasonably optimistic. Some latest US housing data is not so glowing, but all sources have not reported yet since the US government furlough. In itself end-user demand for wood construction projects could be considered as hot this year as it was last.
Download the report as it was submitted here: https://madisonsreport.com/wp-content/uploads/2019/02/CanadaDomesticLumberPricePART4.pdf