May 2, 2025 Lumber News
SYP The SYP lumber market is finally showing signs of softening for the first week this Spring. Although the average for...
Welcome to another look at the world of lumber and the factors that affect the markets for lumber. I continue to be fascinated by the wide range of things that can affect the availability and pricing of a common product like lumber. Things like hurricanes, wet and muddy logging conditions, flooding, wildfires, COVID, Do-It-Yourself trends, automation, AI & robotics, & wood look-a-like products, each make their mark on the lumber world to a greater or lesser extent. This year many of us are thinking more of factors such as tariffs & international trade policies, interest rates, and other political factors.
One hundred years ago, if you needed lumber you may have asked the local sawmill to mill it for you. Today our options have exploded; you might make a phone call, place an order and a truckload of lumber arrives at your place a short while later. The lumber on your load may have grown in Western Canada, Eastern Canada, the Midwest, Pacific Northwest, the deep Southern US, or maybe even a European country like Finland, Sweden, or Norway. Today’s global economy has its advantages but with it can come a mind-boggling array of options and dynamics to consider. At Lumber Link, we count it a privilege to help you consider which options might be best for you to save on your next truckload.
If you buy or sell lumber at volume, I expect you have heard the word “tariff” this year. Another term that you may have heard is “anti-dumping duties”. These are both terms that are describing {extra} charges that are imposed on specific items (like lumber) that are being imported from another country into the United States; and in this case, Canada. In this month’s article we are going to explore tariffs, what impact they have on lumber prices, and maybe most importantly: WHEN they will impact prices.
Tariff talks from president Donald Trump have been based on the response of affected countries. That uncertainty makes it difficult for anyone trying to keep up with lumber prices. Depending on which day of the week you heard the latest news on tariffs, especially tariffs on Canadian lumber, you were likely to hear a different story on the next day.
Trump has stated, “The United States does not need Canadian lumber”, implying we have enough of standing timber here in the United States to easily sustain US lumber needs and consumption. Although there may be plenty of trees in US forests available to fulfill the lumber needs, sawing them into usable lumber will take time. State of the art sawmills don’t just take a few thousand dollars and a few months to build.
While the US does rank one of the world’s largest producers of lumber, it still imports nearly 30% of what it consumes each year; and further, 90% of those imports come from Canada. As we have mentioned in an article a few months ago, Canadian softwood is preferred in the industry, especially in home construction, given its strength to weight ration and significantly less warping.
But what exactly is a tariff? Who pays the tariff? A tariff is a tax or duty imposed by one country to allow another country to ship their goods into the other country. The shipper or seller of the specific good must first pay the tariff fee to get it into another country. So, if for instance a 25% tariff is imposed on Canadian lumber by the US, and a Canadian mill is selling a 2x4x16 for $8 each and it cost them $7.50 to produce it, they go from making $1.50 a board (pre-tariff) to losing $0.50 a board (post tariff). So, to enable them to maintain their margin, they now have to sell the same $8 board for $11.50. Then the consumer chooses whether to still purchase or to source lumber elsewhere.
The next question then, is “When exactly will the tariff come into effect?” In beginning of the first week of March, Trump said that a 25% tariff would be implemented on March the 10th. Nearing the end of that week he stated there would be a 125% reciprocal tariff because of Canada’s long term similar and higher tariffs on US products. (Reportedly 250% plus for dairy products.) Through Canadian adjustment of their tariffs the 125% US tariff on lumber never came to be. March 10th arrived and a short-lived 25% tariff was implemented and postponed all in the same week.
These adjusted statements leading up to the start dates of tariffs being implemented are causing extreme caution on all fronts in the lumber market. If you are a Canadian mill, you may or may not have to pay a 25% tariff on lumber you ship next week, how can you quote your customers accurately knowing that you might be losing money with a tariff. If you are a lumber broker or buyer, you may get a quote for a truckload of lumber on Tuesday and another quote for the same truckload on Wednesday, and the total prices are $500 or more apart. The timing here is crucial when trying to compare “apples to apples prices.”
What we have learned in the first two rounds (February and March tariff statements and implementations) is that the week before the proposed tariffs, mills are not as “quote happy” as normal which in turn means less options for any given truck or tally. The week of the tariffs, prices jump around $50 per thousand board foot (mbf). Trump has now postponed the tariffs (in both months) in the same week they were imposed because of the Canadian response, which in most cases has dropped the prices right back down to where they were pre-tariff. There are a few dimensions though that have not seemed to return back to their pre-tariff prices, among them are most lengths of 2x4s, and almost all of the standard stud sizes. This is most likely due to an influx of new homes being built with spring arriving.
With less than 1/3 of OSB being produced in the US and the rest in Canada, OSB prices seem even more difficult to get a grasp as to where the prices will move. Prices dropped $90mbf in January, increased $70mbf in February, and barely dropped all of March. Grade B tallies are also becoming more difficult to come by driving prices back up as spring approaches, making Grade A appealing compared to Grade B prices.
I picture southern yellow pine mills observing with interest as they watch the value of their lumber increasing with each tariff imposed on Canadian lumber. Almost all dimensions have not had a price decrease since the first Canadian tariffs in February; increasing at a steady rate of $5 to $10mbf a week. These steady increases are especially true for 2x4s (being the most common dimension in home construction) as their Canadian competitor remains at an ever increasing premium. This is nice for US mills since according to their reports last year’s lumber prices were unsustainably low.
Pallet shops across many areas are thankful to have steadier orders for pallets. Demand still varies from customer to customer but the overall theme is that demand has improved some at least. Pallet buyers remain very price conscious when sourcing pallets.
The supply of pallet lumber seems to be becoming tighter in some regions. Some pallet mills are actively raising the price that they are offering hardwood mills in an effort to increase their cant inventory. KD Pine has also been tight in supply and is increasing in cost.
One of the large cross-tie treating plants shared that they treated 10 million ties in 2024 and they are planning to do the same volume again in 2025. This seems to indicate that demand is not expected to decrease drastically. It does seem likely however that the price being paid for ties will be some lower this year since inventories are plentiful. We are hearing mixed reports with a good number of mills still having no issue selling their ties while a few others, especially in the south having trouble finding buyers for their tie production.
Throughout various parts of the country wet winter and spring weather has seriously hindered logging operations. For example, several mills we spoke with in Kentucky shared that they were closed for 2 to 6 weeks because of low log supply. One mill said that in the first 3 months of the year they were idle half the time. There are several species that are showing slight price increases but the question remains whether that is because of increased demand or simply because of such low production levels.
A number of large banks and other financial organizations have shared that they are not expecting any major changes in the housing market for the remainder of 2025. As we mentioned last month this is due to the interest rates that are persistently high as well as the cost of their living expenses. Forbes magazine shared, “Despite gradual improvements in home prices, and more consumers accepting the fact that mortgage rates above 6% are here to stay for the time being, demand remains suppressed. As such, experts don’t expect much movement in the housing market this year.”
On the other hand though, there are a couple of positive indicators for the industry. Even though the Federal Reserve did not reduce interest rates in January or February, the mortgage rates have actually been trending down a little bit so far this year. Some home buyers who were on the verge of purchasing decided that it may be a good time to move ahead. For example, in the last week of February the applications for new mortgages increased by 9% week over week. Refinance applications also jumped by 37% week over week. The month of February also saw a surprising increase in new house starts especially since it followed a slow January. Single family house starts increased by around 11% and multi-family by 10.7% (i.e. apartments).
Every week there are particular dimensions in SYP, SPF, & OSB that we see are at great prices when compared to other dimensions and the overall market condition. If you are curious about the current market when you are looking for your next load of lumber, call us and we will share what we are seeing. Next month we will go over anti-dumping duties and their impact on the American lumber market.
