A pall in North America’s housing market is slashing demand for lumber and threatening to shut down sawmills in British Columbia, Canada, one of the continent’s biggest timber-producing regions. Source: Vancouver Sun
Lumber futures fell 4% to Can$433 per 1,000 board feet in Chicago on Thursday, extending a slump to about 62% this year.
The price is so low that it may result in sawmill closures as producers try to reduce supplies.
“We are below the bottom, so BC producers are losing money,” Capital Markets analyst Paul Quinn said. “I suspect we will get a number of sawmill closures over the next year.”
The move is a stark reversal from the all-time highs set in 2021 during a pandemic-fuelled homebuilding boom and comes as this year’s surge in borrowing costs has made homes too pricey for buyers.
The US Federal Reserve’s rate hike added to the gloom and Chair Jerome Powell said the housing market was ‘very overheated’ during the pandemic.
Canadian producers West Fraser Timber and Canfor already announced reductions in output at sawmills this year.
US homebuilders get more than a quarter of their lumber from Canada.
