Global Trends Review, May 20-26, 2013: J-grade demand to decline slightly in Q3; high prices may cut Chinese deliveries of Canadian lumber in mid-term

Weaker lumber prices may hinder any further sawmill start-ups in North America, as reported by International Wood Markets. Until prices in North America stabilize, buyers in China and Japan are likely to act defensively, buying only fill-in quantities. Steady demand for softwood J-grade in Japan and limited supply have left prices flat, but producers expect a moderate downward trend in the third quarter, given recent market developments in North America. China’s goal now is to become a middle-class society within the next 10-20 years. During these times a mass of people equivalent to the entire population of the U.S. will move from rural to urban areas. This will create ongoing demand for both new housing and infrastructure, as predicted by political scientist Wenran Jiang of the University of Alberta at the Wood Markets Global Softwood Log and Lumber Conference held on May 8 in Vancouver. Lumber importer and distributor Chuck Chen of United Forest Products, Shanghai, reported at the event that even with the rise in prices Canadian softwood lumber will probably continue to enjoy its lead for the next two to three years. However, if price growth continues beyond a certain threshold, Mr. Chen believes competition from cheaper Russian, [...]