North America lumber supply strain to flare up on Russia timber ban

Canfor

24/05/2022 14:50

By Rithika  Krishna
    May 24 (Reuters) - Russia's ban on the export of forestry
products until the end of 2022 will rattle an already tight
North American lumber market as exports from Europe are
redirected to meet domestic demand, company executives and
analysts said.
    Dogged by rising fuel costs, demand exceeding rail transport
capacities and other shipment snags, U.S. home builders have
been struggling to find lumber and other raw materials needed to
deliver on a massive backlog of projects from last year.
    Earlier in March, Russia banned exports of certain goods
such as telecom, medical, auto, agricultural, electrical and
tech equipment, as well as some forestry products to retaliate
against Western sanctions imposed over its invasion of Ukraine.
 urn:newsml:reuters.com:*:nL2N2VD19U
    Russia's forestry exports ban could make things worse by
removing as much as 3% of U.S. lumber imports via Europe,
leading to higher prices for lumber in the United States.
    The raw material  LBc1  was trading at around $651.90 per
thousand board feet (MBF) on Monday, more than 45% higher when
compared with five years earlier.
    About 10% of the lumber consumed in Europe comes from
Russia. With the ban, Europe is more likely to move most of its
production to domestic markets, slashing exports to offshore
markets such as the U.S. and Canada.
    
 
    Even though the United States sources most of its lumber
from Canada and domestically, if the supplies are already tight
and you lose 3% of that pipeline, that's a big chunk, Paul
Jannke from Forest Economic Advisors said.
    Lumber prices will bounce between $500/MBF and $1,000/MBF,
more than 30% above the average of the past five years, Jannke
added.
    "We have been made aware of possible disruption of oriental
strand board produced out of Latvia and Romania. This could put
additional stress on an already undersupplied U.S. panel
market", Kyle Little, chief operating officer of Sherwood
Lumber, said.
    Canadian lumber producer Canfor Corp  CFP.TO  is already
seeing an increase in demand for timber from the Baltics and
central Europe, according to a company spokesperson.

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European lumber export volumes surge nine-fold since 2014    https://tmsnrt.rs/3MJPhpI
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 (Reporting by Rithika Krishna and Shariq Khan in Bengaluru;
Editing by Shounak Dasgupta)
 ((Rithika.Krishna@thomsonreuters.com; Twitter: https://twitter.com/rithika_krishna))