Wood products markets continue to ebb and flow. A couple weeks of increased volumes and pricing strength are followed by muted volumes and slack pricing. We always hope for strong markets heading into spring, but it typically takes a bit longer than we anticipate for summer markets to develop. Hopefully the coming sunshine will bring a bit of enthusiasm along with a dose of vitamin D.
It isn’t surprising that markets are right on the edge of good and bad, considering the policy uncertainty we are currently facing. Federal Reserve interest rate policy, federal forest management policy, inflation rates, potential tariffs, and the impact of re-shoring American manufacturing all add to current uncertainty. Throw in technological disruption due to AI and automation, and we can have a market brimming with potential investment, or one that’s heading to a cliff.
30-year mortgage rates are just short of 7%. High rates won’t help housing affordability or housing starts, which are still hovering around 1.3 million. Housing starts aren’t anticipated to improve significantly in 2025 absent the Federal Reserve changing their current “higher rates for longer” policy. I think it is time for the Fed to start lowering rates as they are risking longer-term damage to the US housing market and the companies that supply materials to it.
Tariffs are still on a 90-day pause for all products that we produce. The 90-day pause is set to expire on July 10, 2025, absent any trade resolution, which is also historically when we have seen seasonal market improvement. The US currently has no tariffs on Canadian veneer, plywood, OSB, or LVL products, while there is a 25% tariff on the same products imported into Canada. I think it is safe to assume that tariffs will change for both sides of the border in the next month or so.
We had the best 3-week run in plywood sales volume for the year at the end of April and beginning of May, followed by a slower week last week. Inquiries are solid this week and sales volumes have improved. Pricing has also improved slightly the last couple of days. Veneer is flat this week as we approach Memorial Day weekend.
The mass timber market is showing real signs of life, not only with the number of projects quoted but also contracts signed. Architects and engineers are also indicating that they are much busier this year on projects likely to move forward. Any positive change in the credit markets could get this market moving.
As we all look forward to Memorial Day, please take a moment to remember and honor those who have given their lives in service of our wonderful country.
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