A recent article reporting on higher prices for harvested timber in the US reveals an interesting paradox: this increase in timber prices may actually lead to a decrease in lumber prices.
How, one wonders, is this the case?
Well, for some time low timber prices have discouraged owners of forestland from harvesting trees, as they would gain little, if any, profit. This has kept supplies of material to sawmills at a depressed level, making it more difficult for lumber producers to obtain necessary raw materials.
A rise in timber prices, though, will encourage foresters to increase tree harvesting. While there are many uses for harvested timber – corrugated material for the boxes increasingly being used to ship products to consumers a key example – a good share of this newly harvested timber will make its way to sawmills for processing into lumber. Blessed with the prospect of more regular supply, sawmills will expand production activities, thus boosting the amount of lumber available to home builders, contractors, other construction professionals, and homeowners engaged in their own DIY projects. For those who have been dealing with high lumber prices, any relief will be welcome!
For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly our series of studies in the Construction and Building Products catalog. Freedonia Custom Research is also available for questions requiring tailored market intelligence.