Lumber Industry
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Lumber demand has experienced a slight decrease over the past three years, but demand for lumber in the U.S. still far outweighs the ability of the U.S. lumber industry to meet it from domestic sources, “Lumber demand in 1997 totaled 49.84 billion board feet, just 44 million board feet below the 1996 total…in 1998 demand should slip to 48.19 billion board feet, a 3.3 percent decrease” (Stable 1). Although demand and lumber production will be less in 1998 than in 1997, it still represents an above average year. Analysts point to the fact that demand has remained solid in spite of modest declines reported in housing starts. Further, lumber prices have been gyrating wildly because of an inability of the lumber industry to supply U.S. demands from U.S. sources (especially in light of environmental protection and other federal legislation prohibiting the amount of cutting on national lands) and because of a new U.S.-Canadian agreement whereby imports of lumber from Canada, which supplies almost a third of U.S. lumber needs, are slapped with a tariff past a certain level of board feet. Lumber prices have escalated tremendously in the past couple of years as the “composite price of framing lumber has risen by more than $100 to $444 per 1,000 board feet from Jan. 26, 1996” (Buchta 1).For all of these reasons I would invest in the lumber industry but I would do so only in “softwood” framing lumber. Further, I w
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r other disasters. Approximately 90% of the homes built in the U.S. are constructed of softwood framing lumber, according to the National Association of Home Builders (Buchta 1). There is strong demand for the lumber produced by the U.S. lumber industry which used to supply roughly one-third of U.S. demand but now can satisfy only half that amount or less, “About a third of the nation’s lumber supply used to come from U.S. public lands. That figure is down to about 10 to 15 percent” (Buchta 2). This has increased the need to import lumber from countries like Canada. However, the U.S. does export lumber to Japan, Mexico, Germany and the United Kingdom. Internationally, the biggest producers of lumber are the U.S., Canada, Russia, Japan, Sweden, Germany, Poland, France, Finland and Brazil.
As discussed, we have already seen how sensitive to external events the price of lumber can be. Legislation is another factor that affects price. For example, the prices of lumber have risen so dramatically in the past year because of the quotas on lumber imported from Canada that became effective in April. Spruce is the primary choice for many builders, but southern pine is more plentiful in the U.S. and a secondary choice of build
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Approximate Word count = 2962
Approximate Pages = 12 (250 words per page)
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