By: The Working Forest Staff
In 2020, the construction boom in the U.S. set off an unprecedented demand for sawn wood, outpacing the rate of recovery from disruptions due to Covid. With stocks depleting, product prices have skyrocketed over the previous year. From February 2021, lumber mill utilization began to fall following a softened activity in the construction sector. According to the results of the year, growth in the sawn wood market is predicted, stimulated by a continuing increase in construction.
Key Trends and Insights
The construction boom in the U.S. has driven a record demand for sawn wood in 2020. Throughout the year lumber mills were at 80-90% utilization. Sawn wood production increased by 5% y-o-y compared to 2019 and reached 71M tonnes. Lumber futures on the Chicago Mercantile Exchange peaked at $1,515 in May 2021, up 300% from the same period in 2020.
The maximum utilization of lumber mill capacities was suitable in January 2021 (92%), but in February it dropped to 83%, and lumber production declined due to a curtailment in demand from the construction sector. Despite the record demand for new housing, construction companies are slowing down their activity due to land shortages, rapidly growing material costs, and labor shortages.
In March 2021, there was a drop in sales for single-family houses, which was caused by a shortage of ready-made houses on the market. In some areas, the situation is so tense that some buyers are applying for all free lots, which very quickly sell out. Against the background of increased demand, housing prices continue to rise, which alongside rising food prices, accelerates inflation.
The high vaccination rate in the U.S. allows expecting a gradual return to normal activities, which will support economic growth. The housing shortage will remain in the coming years, which will stimulate growth in construction and increase the demand for sawn wood. The American sawn wood market is expected to grow at an average annual CAGR of 3.4% and to reach 101M tonnes by 2030.
American Sawnwood Market Size
The U.S. sawmill product market was estimated at $28.7B in 2020, increasing by 4.1% against the previous year. This figure reflects the total revenues of producers and importers (excluding logistics costs, retail marketing costs, and retailers’ margins, which will be included in the final consumer price). The market value increased at an average annual rate of +4.5% from 2013 to 2020.
Imports into the U.S.
In 2020, supplies from abroad of sawmill products decreased by -11.2% to 9.3M tonnes, falling for the second consecutive year after three years of growth. In value terms, sawmill product imports totaled $5.8B (IndexBox estimates) in 2020.
In 2020, Canada (8.6M tonnes) was the main supplier of sawmill products to the U.S., accounting for a 92% share of total imports. It was followed by Brazil (258K tonnes), with a 2.8% share of total imports.
In value terms, Canada ($5.2B) constituted the largest supplier of sawmill products to the U.S., comprising 90% of total imports. The second position in the ranking was occupied by Brazil ($128M), with a 2.2% share of total imports.
In 2020, the average sawmill product import price amounted to $626 per tonne, picking up by 13% against the previous year. Over the last seven years, it increased at an average annual rate of +2.4%.
Average prices varied noticeably amongst the major supplying countries. In 2020, the country with the highest price was Canada ($612 per tonne), while the price for Brazil amounted to $496 per tonne. From 2013 to 2020, the most notable rate of growth in terms of prices was attained by Canada.
Source: IndexBox Platform