The North American lumber market will undergo a massive resurgence by 2011, the International Wood Markets Group has said.
The latest edition of the Wood Markets report claims the downturn in the US housing market will come to an end in two years, leading to massive demand for lumber and record trading across the sector.
This will be driven by the current wave of mill closures and production curtailments, which will result in demand outstripping the available supply when the recovery occurs.
The prediction is based on previous market cycles, which saw the number of US housing starts drop by a quarter at the start of the 1990s, before rebounding and seeing prices reach US$475 per thousand board feet (mbf) and average US$340 for the next two years. A similar situation will be seen when the current housing crisis, which has seen housing starts fall from two million to 900,000 in two years, comes to an end, according to Wood Markets,
“Since there are similarities between these two housing cycles, if the 1991-94 total change in prices of US$155/mbf is applied to the expected US housing recovery period from 2009-2012, then annual prices near US$400/mbf can be predicted – and this may be conservative,” the report reads.