US timber prices soared! A new height in history!

Recently, the price of wood has soared to a record high, rising by more than 30% since the beginning of the year. This is mainly due to the United States import duty on Canadian imports, resulting in tight supply of timber and an increase in construction costs.

However, analysts believe that this wave of gains will probably not last long, even toward bubble, the price may be more than half of the current price in the next few years.

Last year, the U.S. Department of Commerce announced that anti-dumping and anti-subsidy tariffs on timber imports from Canada were implemented in January this year. The average taxation rate for most Canadian timber manufacturers was 20.23%, driving timber prices to rise.

According to FactSet data dating back to November 1984, the July futures price of wood was closed at 602.7 US dollars per 1,000 board feet on Friday, writing a historical high of the most active period. The timber transaction price has soared by nearly 35% this year.

The World Trade Organization (WTO) has accepted the request of Canada to set up two committees to rule on the United States to increase timber tariffs. The WTO ruling will be the key to affecting timber prices. On the other hand, analysts believe that the current price is higher than the basic value and the increase is expected to be limited.

Walter Zimmermann, the chief technical analyst of ICAP, the world’s largest trading brokerage company, mentioned the Softwood Lumber Agreement signed in 1996 and Canada. At that time, the price of wood rose steadily, rising from US$346 per 1,000 board feet. To 488 US dollars, an increase of 41%.

Simmonman pointed out that the WTO has not revealed any clues to the ruling, but the price of wood has risen by more than 30% since the beginning of this year. The data also shows that wood prices have risen sharply in the past two years, and that it has only risen by more than 40% in 2017 alone.

Simmonman bluntly stated that the wood market has "all the features that the bubble cannot sustain."

He said that according to the bubble situation in the financial market, timber prices are expected to rise to the peak in the middle of this year and then fall in the next few years. According to technical analysis, timber prices may fall to 2016's low.

The price of U.S. timber was lowered to 233 U.S. dollars in January 2016, and the current price will fall by more than 50%.