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Stud lumber shortage predicted

As U.S. new residential lumber demand more than triples from 2009 to 2017, lagging stud lumber output and capacity is expected to create huge supply chain dislocations with soaring prices as the outcome, according to a new report.

March 1, 2013  By WOOD MARKETS

North American Stud Industry and Market: Current Situation and Outlook to 2017, a new report by International WOOD MARKETS Group is an extensive survey of the North American lumber industry on how the impact of rebounding U.S. lumber demand will strain the supply chain. The survey of stud lumber producers is indicating that shortages of stud lumber can be expected, at times, over the next two to five years as the U.S. housing recovery heads back towards 1.5 million housing starts (and most likely even higher).

The report will include:

• Estimates of when North American stud lumber production could start to lag demand in the housing sector as well as other end-use segments.
• Analysis on the potential supplies from Europe: it will take higher prices to allow European stud mills to consider exports to the U.S., and there limitations in terms of domestic log costs, mill configurations, planer capacity, shipping costs, currency exchange and market risk.
• Annual price forecasts: for benchmark solid sawn and finger-joint stud products in key lengths to show where prices are headed and if price premiums between producing region will hold or change, based on market demand and preferences.
• Annual North American market demand forecast for studs: including projections of species, grade, lengths, size, geographic region, and customer segments in 2017 as compared to 2012.
• The potential supply response to 2017: by producing region and stud type (i.e., solid sawn, finger-joint, imported, and steel), taking into account fibre supply constraints.
• Annual forecast of potential capacity: of North American and European stud mills, as well as random length mills that are able to cut PET stud products.
• China and Japan: how export markets can further impact demand and prices for studs.

“It is already evident that rising U.S. demand from the recovering U.S. housing market is going to put serious demand pressure on stud lumber supply,” states the report. “It also appears that many companies have not yet properly assessed the full impacts on their business from the potential of this new stud demand surge. There will be big winners as a result of how business plans are adjusted to account for the projected demand for stud lumber as the recovery continues, including possible acquisitions and even mergers.”


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