Cost of 2x4ís rise as lumber faces U.S. duties
Prices of standard building lumber are inching higher as Canada and the U.S. negotiate a revised Softwood Lumber Agreement, which expired in 2006.
Analysts warn that the lumber prices could increase further if Canadian sawmill production falls in the face of higher U.S. export duties.
As of June 23, the price per thousand board feet (mbf) of standard eastern 2x4s was $555, up from $549 a week earlier and above the 52-week average of $522 mbf, according to Natural Resources Canada. The data is drawn from industry research firms Random Lengths and Madison’s Lumber Report.
Since April, the U.S. has imposed preliminary countervailing duties on Canadian softwood lumber averaging 20 per cent. Preliminary anti-dumping duties are expected to kick in within a month, provided no new deal is reached.
“We expect them to be in the 20 per cent to 25 per cent range,” said Bryan Yu, senior economist with Central 1 Credit Union. Yu said that lumber production has already been reduced, which is forcing Canadian lumber prices higher.
“Key price composites [such as building panels and lumber] have shifted higher with the Random Lengths composite index up about 20 per cent since the beginning of the year and the Bank of Canada forestry composite tracking a similar pace,” Yu reported this week.
The current price hikes already relate to an extra $5,000 per new single-family detached house, estimated Bob de Wit, CEO of the Greater Vancouver Home Builders’ Association.
de Wit said it's not clear how the tariff will impact domestic lumber prices, but he has a pretty good idea.