The North American lumber market has, to a large extent, been a buyers market since the beginning of the financial crisis in 2008, but is now shifting to a sellers market with the increase in demand for lumber by the huge U.S. market. In May, lumber consumption in the U.S. was 13 % higher than in May of 2011. The May 2012 consumption level was actually the highest seen for the month of May since 2008.

U.S. demand for lumber is likely to continue to go up in the second half of this year and into 2013 as the housing and remodeling markets slowly improve. The American and Canadian sawmilling sectors are currently running at about 80% of practical capacity according to WWPA, so there is room to add hours and shifts to meet increasing lumber demand. However, it is going to be a bumpy road ahead as the sawmilling sector’s infrastructure industry has downsized the past three years.

The Canadian sawmilling industry has ramped up production the first six months of 2012 as compared to the same period in 2011. All provinces with the exception of Ontario have produced more lumber this year than last year. The provinces of Alberta and Quebec have seen the biggest increases thanks to higher demand for lumber in the U.S. housing sector. West coast sawmills have also been shipping more lumber to China this year, with exports during the 1H/12 being up 3% as compared to the 1H/11.

The improved markets for lumber have put upward pressure on lumber prices. During the past 12 months, southern yellow pine (SYP) prices have gone up almost 37%, while spruce-pine-fir (SPF) prices in Canada have increased by about 35%.

From IHB: