With Americans buying more new homes than at any time since the recession, the cost of the wood used to build them is getting a lot more expensive.
Lumber prices are off to their biggest rally in more than a decade, touching a 19-month high in late July as demand increased from builders. But almost a third of all wood used in U.S. homes comes from the world’s top exporter, Canada, where surging shipments have compounded a trade dispute and increased the chances of import tariffs that may top 30 percent. That spells trouble for producers including West Fraser Timber Co. and Canfor Corp.
While the two countries have until October to iron out a new softwood-lumber trade agreement to replace one that expired last year, imports are flooding into the U.S., intensifying opposition from American producers who say their northern neighbors get unfair subsidies.