Page 12 - FDMAsia May/Jun 2026

10 MARKET BEATS MAY/JUN 2026 FDM ASIA | www.fdmasia.com

Recent Challenges Faced by In addition, the stronger dollar made domestic production

the Global Timber Market more expensive and limited export competitiveness. However,
the escalating conflict in the Middle East and rising energy
costs remain key factors that could influence the inflation
tomonikon outlook for building materials.

Sawmill closures and rising transportation and shipping
costs
On the supply side, sawmill closures in the US and Canada
and increased tariffs on Canadian lumber imports are expected
to remove over 1.3 billion board feet of lumber from the
North American market, according to market analysts at
Tradingeconomics.
Construction lumber is piling up in warehouses However, geopolitical tensions in the Middle East are also
Lumber prices on the US futures market fell to $566 per 1,000 weighing on the outlook in the longer term, as rising energy

board feet, the lowest level since March 2026. costs are driving up transportation and shipping costs for
This is due to ongoing uncertainty and persistent trade lumber worldwide.
tensions, which are weighing on sentiment and driving down These factors actually point to a supply shortage, which
lumber prices. could offset the effects of high mortgage rates. On the other
The US recently imposed preliminary anti-dumping and hand, regional inventories in North America remain high.
countervailing duties on Canadian softwood lumber. Including While production cuts in British Columbia continue, severe
the existing 10 percent duty, the effective duties on Canadian storms in the southern US have brought construction site

imports are expected to be around 35.9 percent once they activities to a standstill. This has created a supply surplus
take effect in August. among lumber dealers, forcing them to offer aggressive
Despite these measures to support US lumber producers, discounts to reduce inventory.
capacity utilisation at US sawmills remains relatively low at around The tariffs on softwood lumber imposed by the Trump
64 percent, according to market analysts at Tradingeconomics. administration, which were intended to prop up prices, instead
At the same time, high and rising construction costs and dampened demand by significantly increasing the average
high interest rates are weighing on construction activity in cost of home construction.
North America as well as in Europe. Confidence among US This undermined the confidence of homebuilders, which
construction companies has fallen to its lowest level since was necessary to reduce existing inventory. In addition, interest

September 2025. rates on 30-year fixed-rate mortgages rose to 6.22 percent
High mortgage rates and rising real estate prices have after the Federal Reserve left key interest rates unchanged.
significantly slowed new housing construction and led to an The market is also continuing to be weighed down by a
oversupply of seasonal goods among lumber dealers. sharp rise in crude oil prices, which is causing energy-intensive
This oversupply forced regional lumber dealers to offer transportation and production costs to surge. These factors
deep discounts in order to clear their inventory during a period are forcing homebuilders to cut prices to manage the rise in
of unusually low construction activity. unsold inventory.