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Lumber Commentary

Posted By Administration, Thursday, July 23, 2015

By Todd Askew, Mill Sales Biewer Lumber

Over the past 7-8 years, Biewer Lumber has seen significant changes in the softwood market that have greatly impacted the landscape from a buying perspective. Operating four sawmills right in the heart of red pine country—two Michigan mills and two in Wisconsin – Todd Askew, mill sales at Biewer Lumber, identifies two key factors that are impacting the market:

1) Offshore business is important, but not as much as domestic demand.

  • Overseas destinations, China most importantly, have a great impact on the market.
  • Softwood lumber exports are down through 2015 Q1.
  • Domestic housing starts are expected to top 1 million units, a level that should be able to support more available material.
  • The slow start to housing in 2015 was largely weather driven; pent up demand should sustain the market well into the fall.

2) The Canadian/US Exchange rate has encouraged US buyers to import, but this could change.

  • Canadian softwood manufacturers have been getting a better return by shipping to the US because of the 120+% exchange rate.
  • The “Softwood Lumber Agreement” between the two countries is applying a tax on Canadian shipments, payable by the mills.
  • So far the advantageous exchange rate has outweighed any applied tax.
  • The tax is likely to increase. It is based on a rolling average of the Random Lengths Composite Price. In 2015, expect to see the tax be brought up to its maximum level.
  • Some Canadian producers may see a reduced return in shipping the US because of this.

(written for PalletCentral July-August 2015)

Tags:  Canada  housing  lumber  softwood  supply 

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