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July 7, 2021

Who has it right?

These are headlines of recent articles which appeared in a well know media platform for our wood industry;

June 16   “Prices explode in Germany: wood is the new gold”

June 16   “The bubble has burst: US lumber prices are falling fast”

June 21   “US lumber prices expected to drop to $600 per thousand board feet in the next six months”

June 28   “US lumber prices are likely to stay double the historical average for at least the next 5 years”

July 5       “North American lumber prices dropped for an 8th straight week-down more than 50% from highs”

To be fair, these articles represent different people’s opinions, most probably with different intentions in sharing their views.

Except for the article about Germany, which refers to mixed soft- and hardwoods, it is important to understand that all the above articles are related to US softwoods as construction lumber, not hardwoods.

How can any layman or even an industry expert make sense out of these conflicting statements? Who has it right, and who is wrong? Maybe there is no “right” or “wrong”, but it proves that the balance between demand and supply has been severely disrupted. Many factors have been and are still contributing to this imbalance. It started with the US imposing trade tariffs on Canadian lumber (i.e. softwoods) in 2017, followed by the US-China trade war in 2018. Furthermore, the rapidly expanding spruce bark beetle infestation across Europe’s softwood forests during recent years, then the Covid pandemic and lastly, the crazy shipping freight rates. The blockage of the Suez Canal and actual vessel jam in Yantian, the world’s fourth-largest container port, are worsening the already dramatic situation.

The demand for softwood construction lumber in the US for housing and home improvement and the hunger for soft- & hardwood garden products of European end-users show signs of weakening. With increasingly relaxed Covid restrictions, consumers tend to spend their money again on holiday trips and entertainment instead of upgrading their homes.
None of the above mentioned underlying causes has been resolved yet. We should therefore not expect too drastic changes for the better too soon.