In the last few months, lumber supply from Canada, United States’ biggest lumber provider, was shaken by a slew of factors like insect attack, forest fires and shortage of transportation. President Trump’s decision to impose a huge tariff on lumber imports from Canada hit lumber supply from that country further and cleared the path for local players.

Declining supply boosted U.S. lumber prices, which have jumped more than 60% since the beginning of 2017. Despite an increase in lumber prices, demand refuses to fall as evident from the fact that construction activity touched an all-time high in May and jobs data was encouraging. Also, homebuilder sentiment remained steady in July.

U.S. lumber producers are evidently busy meeting the rising demand. In this context, Pleasant River Lumber’s co-president, Jason Brochu, said import duties on Canadian lumber serve as “a level playing field” for domestic players. Brochu added that Pleasant River Lumber, which has mills in Maine, will be “able to expand and produce more lumber,” following these developments.

Although concerns remain over labor shortage and regulatory issues in the industry, Brochu is positive that the industry has a lot of room to expand over the long term. Additionally, Chief Economist of the National Association of Home Builders, Robert Dietz, said that producers need more land to “harvest lumber on,” in order to adjust to the demand-supply gap.

Though the National Association of Home Builders (NAHB) sentiment index remained unchanged in July, it still remained solid and above the 50 mark, indicating improvement in the sector. The NAHB/Wells Fargo builder sentiment index was at 68 in July, after demand for single-family homes remained at a high level of 74 on the back of an encouraging jobs report.

Read more on this from Nasdaq at https://www.nasdaq.com/article/will-strong-lumber-prices-bring-a-new-dawn-for-us-producers-cm993376.