“Recent announcements of mountain pine beetle-related mill closures in the B.C. Interior and North American companies’ continued export expansions into Asia have shone a spotlight on the dynamics of the evolving business environment for wood producers,” says Russell Taylor, president. “Over the next few years, the timber supply base will continue to tighten across North America and will continue to do so until the end of the decade.”
While the demand for lumber and panels from the U.S. housing industry is steadily increasing, lumber and panel producers in 2013 increased output at a slightly higher rate than overall demand, causing prices to retreat for three months starting in the second quarter of 2013 and later at the end of the year. “Although the lumber and panel industries have room to expand output over the next two years,” says Taylor, “by about 2016, steadily rising demand (led by U.S. housing starts) is expected to absorb all of the available output, leading to supply chain shocks that should create substantial and sustained price increases, including record-level lumber prices.” There will continue to be price volatility as more limited and higher cost capacity is added and/or more expensive imports increase in 2016 and beyond.