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Canadian lumber producers expect a record year

The outlook for Canadian lumber producers appears to be more rosy than ever, with the forecast for 2018 housing starts in the US and lumber prices expected to be on the rise yet again. Source: Baystreet

With forecasts of nearly 8% growth in housing starts expected in 2018 (on a seasonally adjusted basis), lumber prices are expected to remain robust in North America, dampening the effects of any duties as US builders look to source lumber at increasing prices.

Softwood lumber producers have for some time been singled out as a key industry by the Trump Administration which has hurt American job growth; with the US recently continuing with charging duties on imported Canadian lumber, some have expected Canadian lumber to become less competitive over time, providing a significant headwind to the industry overall. 

Many Canadian softwood lumber producers have begun to look outside of North America for buyers, to places where cheaper Canadian softwood lumber can be competitive and duties are absent.

Prices of lumber have hovered higher in recent years, nearly doubling since 2015 as growth within new housing starts and the repair and remodeling segment have increased the rate of demand growth relative to supply. 

Improving supply and demand fundamentals should in theory, over the near to medium term, result in a continued upward trajectory for most producers.