Strengthening lumber demand in 2025 should boost prices 20%: Global Wood Summit

By Kelly McCloskey, Editor
Tree Frog Forestry News
October 31, 2024
Category: Special Feature, Business & Politics
Region: Canada, United States

ERA Forest Products Research’s John Cooney opened day two of the Global Wood Summit in Vancouver by introducing Alejandra Glazebrook of PwC Canada, who provided an overview of global trends in forest sector profitability. Cooney followed with a detailed report on the North American lumber market and then moderated a Q&A panel with Ken Shields (Conifex Timber), Stefan Lyren (Olympic Industries), John Bal (Interfor) and Dean Garofano (Delta Forest Group). In addition to weak lumber prices—economic fibre shortages, softwood lumber duties, residual offtake challenges and lingering labour constraints—were noted as causing headaches for producers. Over 3 billion board feet of sawmill capacity closures were announced across North America in 2024, after about 2 billion board feet between 2022 and 2023. And sawmill closures are no longer just a BC phenomenon with over 1.2 billion board feet of curtailments in the historically “lower cost” US South to date in 2024.

Looking forward, Cooney and the panel expect an improving lumber market due to stronger demand and softwood duty increases which will hurt cash flows. Key takeaways include:

  • How much lumber demand improves in 2025 will depend on the trajectory of US Fed rate cuts
  • Following a raft of North American mill closures between ’22 and ’24, lumber supply constraints will become more evident
  • Lumber supply from Canada and the U.S. West is effectively tapped out in the near-term
  • The U.S. South is now the lone growth engine in terms of domestic supply
  • European imports may also fill a gap, but rising costs make export economics more difficult for Europeans.

Cooney estimates lumber demand in 2025 to increase about 1.5 billion board feet and given supply constraints, that 2×4 prices will rise about 20% to $490 for SPF and $465 for SYP. Interestingly, in an online poll of the room delegates, two-thirds agreed with Cooney’s estimates or think prices will be even higher. More on the Global Wood Summit in tomorrow’s Tree Frog News, including comments by the US Lumber Coalition’s Zoltan van Heyningen.

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