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Sverige Trä Nyheter US-market - Up, down and up again...

US-market - Up, down and up again...

After a turbulent 2018, who would make a call on 2019? The prices from western Canada have gone up by $50/Mbf since mid-December – or roughly $30/m3.

January to June 2018 showed a historical price-run – coming from imposed duties between US and Canada, rail issues that decreased available volume into the market, extensive wild fires that decreased log supply, and strong demand. Prices reached levels that the marked not had seen before.

Thereafter in Q3 the steepest quarterly drop ever. Caused by increased supply, but also a slowdown in demand. A continued increase in housing starts is still expected, but affordability was more frequently being used as the explanation to why demand increased more slowly than before.

2019 facts that can’t be ignored 
Based on the history from year 2018, one should refrain from making any projection for the remainder of 2019. But the fact is that the first couple of months have brought significant price increases. Obviously, prices during Q4 2018 got down to levels where mills in western Canada (BC) decided to cut back on production. Log prices (stumpage fees) are simply too high to make enough profit. Part of the reason for the increased log prices is that most of the Mountain Beetle infested logs have been consumed. That puts a limit to the annual allowable cut in BC – how much that can be harvested. Another factor is the wild fires mentioned before, that destroyed thousands upon thousands of hectares of forest land. So, there are reasons to believe that many of the curtailments are to be, as stated, permanent. 

 

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Subjects: Timber

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Subjects: Timber

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