Log exports are now 40 percent below their 2007 peak and have continued to drop this year, while the mountain pine beetle epidemic is killing trees in British Columbia, according to International Wood Markets. U.S. lumber supply will be “overwhelmed” in the next five years, sending prices to a record in 2014, the Vancouver-based researcher said in a Dec. 10 report.
Companies such as Vancouver-based Canfor Corp. are benefiting from the lumber rally, Technical Alpha’s Stellakis said. Canfor shares through Dec. 14 jumped 44 percent this year. Wayne Guthrie, the company’s senior vice-president of sales and marketing, said in September that Canfor, the second-largest North American softwood producer, was “excited” about the increase in “high-value” shipments of lumber to China.
As the economy in the U.S. improves, consumers will pay more for houses, Wood Resource’s Ekstrom said. That will help offset the increased cost of lumber for homebuilders and board sellers, he said. The Case Schiller Composite Index of home prices in 20 cities is up 7 percent this year.
“If people believe there will be higher prices in housing in 2014, they think, ‘maybe I should look at buying in 2013 instead,’” Ekstrom said. “Interest rates might not go much lower than where we are, so the earlier they can buy a house the better, because it’s not going to get much better from a buyer’s perspective.”