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Offbeat Lumber prices catch fire as tight supply meets trade tariffs

23:46  15 may  2018
23:46  15 may  2018 Source:   bloomberg.com

Oil pops above $70 for first time since 2014

  Oil pops above $70 for first time since 2014 Rising oil prices just passed another milestone as traders prepare for the possibility that President Trump will abandon the Iran nuclear deal.Oil prices have been climbing partly because of expectations that President Donald Trump will abandon the 2015 Iran nuclear deal, which allowed Iran to export more crude.

The lumber market is red-hot, with futures rising to another record on Tuesday thanks to a confluence of import tariffs , transport bottlenecks and strong housing demand. The futures rose 1 percent to close at 9 per 1,000 board feet on the Chicago Board of Trade .

Lumber Prices Reach U.S. Record on Tight Supply , Trade Tariffs . (Bloomberg) -- The lumber market is red-hot, with futures rising to another record on Tuesday thanks to a confluence of import tariffs , transport bottlenecks and strong housing demand.

The lumber market is red-hot, with futures rising to another record on Tuesday thanks to a confluence of import tariffs, transport bottlenecks and strong housing demand.

Futures traded as much as $15 higher -- the daily maximum -- to $627.70 per 1,000 board feet on the Chicago Board of Trade. They’ve surged 68 percent in the past 12 months, a bigger gain than any of the raw materials tracked by the Bloomberg Commodity Index.

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Price are likely to keep rising, according to analysts at Bloomberg Intelligence and much to the chagrin of U.S. homebuyers. Here’s what supporting the market:

U.S. Tariffs

The lumber rally picked up steam after the U.S. in November imposed average import duties of 21 percent on Canadian shipments of timber following a years-long trade dispute. While the move supports U.S. producers, it’s bad news for domestic builders, who get more than a quarter of their needs from north of the border. For house construction in particular, the U.S. simply doesn’t have enough supply to meet demand. The National Association of Home Builders, an American industry group, estimates the tariffs will increase the price of an average single-family home built in 2018 by $1,360.

Housing confidence hits record high as home prices skyrocket

  Housing confidence hits record high as home prices skyrocket Supply is tight, prices are soaring and mortgage rates are rising.Of the index's six components, only the share of those who think it's a good time to buy fell. No surprise there, given the high competition in most of the nation's neighborhoods. The share of those who think it's a good time to sell and those who think prices will continue to rise jumped the most. In addition, more consumers think their incomes will rise over the next year, and fewer think they will lose their jobs.

U.S. Tariffs . The lumber rally picked up steam after the U.S. in November imposed average import duties of 21 percent on Canadian shipments of timber following a years-long trade dispute. For house construction in particular, the U.S. simply doesn’t have enough supply to meet demand.

There was high demand for a limited housing stock. Wildfires diminished that stock dramatically. Lumber prices catch fire as tight supply There is a limited supply of labor and building costs will rise as a result, Spaulding said. Buyers could lose money if they don't account for building costs.

Transport Woes

Canada’s rail delays haven’t left just grain and oil stranded on the Prairies. Lumber producers such as Canfor Corp. and West Fraser Timber Co. also have piles of inventory stacked at their sawmills because of a lack of transport capacity. Canada is the biggest softwood lumber exporter to the U.S., and the disruption is contributing to price gains. Producers may work through the backlog this year -- Interfor Corp. said this month it plans to catch up on shipments in the second quarter.

Tight Supplies

Single-family housing starts, which use about three times as much wood as multifamily construction, continue to increase, and orders are expected to rise now that spring building season has arrived. The U.S. housing recovery and demand for residential repairs may lift lumber consumption in 2018, according to RISI, Bloomberg Intelligence analysts Joshua Zaret and Evan Lee said Tuesday in report. They also cite "razor-thin” inventories, owning to the duties and transportation delays, as well as a seasonal uptick in demand. The framing-lumber composite price probably will rise 20 percent in 2018 to a record, according to Bloomberg Intelligence.

Oil slips further below $80 a barrel as focus on OPEC intensifies .
Oil prices recorded their largest one-day drop in two weeks on Thursday, with expectations building that OPEC will end an output deal that has been in place since the start of 2017 due to concerns about supplies from Venezuela and Iran. Benchmark Brent futures were down $1.08 at $79.72 a barrel, its largest one-day fall since May 8, while U.S. crude futures dropped 86 cents to $70.98 a barrel."This discussion about possible OPEC supply increases after the June meeting has put a brake on the oil price for the time being, so $80 is a big hurdle to overcome," Commerzbank strategist Carsten Fritsch said.

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