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US housing lifts lumber

There was a higher lumber demand in the US in the third quarter of 2012, but sawlog prices have remained unchanged since 2011. Source: Wood Resource Quarterly

Housing starts in the US jumped to 894,000 units in October. This was 19% higher than in August, and as much as 42% more than in October of last year.

So far this year, housing starts have been at their highest levels since 2008, and market analysts expect the next 12 months to be bumpy but still upward-trending.

The improved housing market has been good news for many sawmills and lumber production has been higher throughout the continent, with an increase of 7.3% in August year-over-year in the US, and of 6.3% in Canada over the same time period.

The US Northwest and the province of Quebec have been the regions with the biggest increases in production.

The sawmills in Quebec have ramped up production, with output in August being 30% higher than in August last year.

For the first time in two years, sawmills in Western US produced as much lumber as the mills in the US South in August.

The improved US housing market has also resulted in an increase in the importation of lumber. Softwood lumber imports in the third quarter of 2012 were up 9% over the previous quarter.

The higher lumber demand has pushed lumber prices substantially upward with Southern pine prices 48% higher year-over-year, and Western hemlock prices up 32% over the same period, according to Random Lengths.

Pine log prices across the US South have been unchanged for almost two years, and sawlog prices in the US Northwest have been surprisingly flat for more than a year. However, in early November, there was increased upward pressure on sawlogs prices in the West from Chinese log buyers that were more active in the market than earlier in the year.