Analysts Expect Lumber and Panel Pricing and Demand to Remain Strong for the next Several Years

Despite recent declines from record breaking high levels, forest product market experts anticipate prices for lumber and panels will remain strong throughout North America for the next several years. The demand for building products will be led by both new construction and home renovation as tight inventory and aging existing homes, along with low interest rates and untapped home equity. FEA principal Paul Jannke, said in a conference call discussion organized by CIBC that there’s limited ability to increase North American production of lumber and panels because of wood fiber shortages in British Columbia, the as-yet-undetermined impact of recent forest fires in the western United States and COVID-19-related labor shortages in the U.S. South. Jannke went onto say, “We did expect to see lumber prices drop … (but) we’re going to continue to see mills produce lumber even as prices come down and that’s because mills are making a significant amount of money right now. We don’t think prices are going to retest the lows that we saw in 2019; in fact, if we’re looking out over the next couple of years, we’re looking for prices to balance between US$400 and $500 (per thousand board feet) so that’s a bit higher than we saw through the second half of 2018 and through most of 2019.”