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Global timber supply will be tight North American wood prices will be higher

Views: 2     Author: Site Editor     Publish Time: 2018-04-13      Origin: Site

The recently announced final countervailing (CVD) and anti-dumping duties on Canadian timber exports will cause timber prices to remain near historical high levels in 2018 and will be higher in different periods in the next five years. This is because Canadian timber production and Canadian exports to the United States are expected to slow down in 2018.

Canadian timber exports that have increased through import tariff restrictions may not have enough timber supplies to fully balance US demand. The US timber capacity will need to increase significantly, more overseas imports, and/or record prices to stimulate more supplies.

Although the timing of supply and demand is always unpredictable, the organization predicts that the first true “supply gap” may occur as early as 2019. When there was no increase in wood imports from Canada, and there was no other more timber supply to meet the overall needs of the United States. (relative to the expected decrease).

All this means that, in 2018, sustained price volatility may recur, and in 2019 and/or 2020 it will be even greater. It is predicted that there will be further record-setting timber prices in the US market by then.

Here is a summary of some regional trends:

Since Canada's import tariffs on timber imports will bring huge cost advantages to many US factories, the wave of capacity expansion has begun and more capacity expansion is expected. This will enable U.S. steel companies to increase their domestic market share.

Canadian timber production is expected to decline slightly in 2018, and may decline in 2019 from the impact of US import tariffs and timber supply tensions. It is expected that China’s exports to China will increase slightly, but this will depend on the level of timber prices, compared with the United States’ import tariffs.

Due to the marginalization of some sawmills due to import tariffs and the impact of timber production caused by uneconomical mountain pine beetles, the British inland timber harvest will decline.

As a cost-intensive region in Canada, steel mills in eastern Canada sometimes encounter difficulties, absorbing import tariffs in the face of weak timber prices. However, it is expected that by 2020 (or earlier), more exports will be needed to fill the expected US "supply gap."

It is expected that European structural softwood imports will increase substantially to take advantage of the impending supply gap, which will keep timber prices at a high level. The scale of European softwood exports to the United States is difficult to predict, but higher prices will attract more U.S. goods.

In terms of hardwood hardwood, although exports of timber in the first three quarters of this year were roughly the same, in the United States, the export of red oak increased substantially.

Last year, the United States exported 55 million cubic feet of timber, while red oak exports increased by 64%, accounting for 29% of total US timber exports, close to 16 million cubic feet.

China is still the largest recipient of hardwood wood in the United States. Its imports have increased by 19%.

Due to the increasing demand in China, the removal of logs from the already tight US market may increase the price of logs in the United States. Chinese buyers pay 50% more than ordinary sawmills. Red oak, white oak, pecans, and cherries are very popular in China's new rich areas. They also have enough net worth to pay for expensive prices.

Overall, the shortage of logs will increase the price of timber in the United States. This will only make the sawmills, which already have low timber stocks, become more nervous.

This will also make US exports more expensive, and non-US wood products imported from China will also be more competitive.


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