Brief

US lumber prices rise in response to bilateral trade uncertainty

Dive Brief:

  • Growing uncertainty around the outcome of a protracted trade dispute between the U.S. and Canada is forcing softwood lumber prices up, according to the National Association of Home Builders.

  • Prices are already rising and could surge further by the spring. The Random Lengths Framing Lumber Composite Index rose from $366 on Feb. 3 to $391 on Feb. 10 — the most in a single week since August 2003 — as the domestic supply of lumber fails to keep pace with demand and new tariffs are being considered on Canadian imports.

  • The NAHB is urging U.S. lumber producers to raise production levels. The association is also looking outside North America for new supply sources.

Dive Insight:

Discussions to revive the bilateral softwood lumber trade deal are in a holding pattern after the agreement expired in 2015 and a one-year moratorium on related legal action between the U.S. and Canada ended in October. Contentions are said to surround the U.S.’s desire to reduce Canada’s softwood lumber market share to 22% over a four-year period from 28% currently.

The U.S. is investigating claims that Canadian producers are selling their product in the U.S. at below-market rates, putting U.S. producers at a disadvantage. In response, the Canadian softwood lumber industry launched a lobbying campaign to emphasize the role of their exports in the U.S. homebuilding industry and the impact of such trade restrictions on cost.

The NAHB noted that the negotiations are not likely to resume until the U.S. investigation is complete, which could result in countervailing and anti-dumping duties, and the new administration confirms a Secretary of Commerce and U.S. Trade Representative.

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Filed Under: Residential Building