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US and Canada Timber and Wood Product Price and Market Report
16 – 31th Jul

Report from North America

 Housing starts fell in June but Canada sees largest jump in 10 years
Single-family homebuilding fell in June but permits for future construction rose to a 12-month high on the weakness of the existing home sales market. The decline in housing starts came after a massive 19% surge in May which propelled the number of starts on single-family projects to an 11-month high. Starts in June dropped to a seasonally adjusted annual rate of 1.43 million (below economists’ expectations for 1.48 million) according to the US Census Bureau. That was down 8.1% from a year ago and 8.0% from May.

In June only 600,000 existing homes were listed for sale across the US, noted Bright MLS Chief Economist, Lisa Sturtevant. “While new construction will not immediately solve the supply problem in the housing market, the recovery in the homebuilding industry and the delivery of more new homes is essential for meeting the nation’s housing needs and easing housing affordability challenges for prospective home buyers,” she said.

Overall, single‐family housing starts in June came in at a rate of 935,000, 7% below the revised May figure of 1,005,000. The June rate for units in buildings with five units or more was 482,000. Issued permits, an indicator for future completions, also decreased 3.7% overall from May, and were 15.3% lower from a year ago. But single-family permits increased (+2.2%) while the more volatile multifamily permits declined (-12.8%).

The number of single-family homes under construction remains high, while a record number of multifamily units are under construction even if the pace of expansion is slowing.

Canadian housing starts rose 41% in June compared with the previous month, the largest increase in the last 10 years, led by groundbreaking on multiple unit urban homes, data from the national housing agency showed. The seasonally adjusted annualized rate of housing starts rose to 281,373 units in June from a revised 200,018 units in May, the Canadian Mortgage and Housing Corporation (CMHC) said.




Home sales fall and inventory at near historic low
Sales of previously occupied homes in the US fell in June to the slowest pace since January, as a near-historic low number of homes for sale and rising mortgage rates kept many would-be homebuyers on the sidelines. Existing home sales fell 3.3% in June from May’s seasonally adjusted annual rate of 4.16 million said the National Association of Realtors (NAR). Sales sank 19% compared to June last year. All told, sales are down 23% through the first half of this year.

The latest housing market figures are more evidence that, even with prices easing back after rising for more than a decade, many house hunters are being held back by a persistently low inventory of homes for sale. Some 1.08 million homes remained on the market at the end of June, down 14% from a year earlier said the NAR. That amounts to a 3.1-month supply at the current sales pace. In a more balanced market between buyers and sellers, there is a 5- to 6-month supply.

Existing-home sales in the Northeast grew 2.0% from May to an annual rate of 510,000 in June, down 22% from June 2022. In the Midwest, sales were unchanged from one month ago at an annual rate of 990,000 in June, slumping 20% from one year ago. Sales in the South fell 5% from May to an annual rate of 1.91 million in June, a decrease of 16% from the previous year. In the West, sales declined 5% from the previous month to an annual rate of 750,000 in June, down 23% from one year ago.


US job market cools but continues growth
The US economy added 209,000 jobs in June in yet another monthly jobs gain but the smallest increase since the end of 2020. The jobs report cames as market watchers are eyeing the Federal Reserve to see if interest rate hikes will return to tame inflation amid high employment.

The figures released by the Bureau of Labor Statistics fell short of the estimated 230,000, while the unemployment rate ticked down to 3.6%, from 3.7 %, near the lowest level in 50 years. His indicates that hiring in the US is cooling after a recovery from the loss of jobs during the COVID pandemic.

Employment in construction continued to trend up in June (+23,000). Employment in the industry has increased by an average of 15,000 per month thus far this year compared with an average of 22,000 per month in 2022. Employment in manufacturing showed no significant change in June.



Consumer sentiment rises to best level in two years
Consumer sentiment in July rose to its highest level since 2021 a survey by the University of Michigan found. The mid-July report showed that job prospects and lower inflation have consistently boosted consumer sentiment about economic conditions in recent months.

Consumer sentiment rose for the second straight month, soaring 13% above June and reaching its most favorable reading since September 2021 the preliminary survey from the University of Michigan says, adding “the sharp rise in sentiment was largely attributable to the continued slowdown in inflation along with stability in labour markets."

All components of the index improved from June levels with optimism increasing by 19% for long-term business conditions. For consumers, the sentiment improved for all but low-income households.

Headline inflation in the US moved to its lowest point since early 2021, rising 3% over the 12-month period to June. So-called core inflation, which strips out volatile food and energy prices, was at 4.8% annually to June, only slightly lower than in May.


US manufacturing troubles worsen
US manufacturing activity fell for the eighth consecutive month in June according to the latest Manufacturing Institute of Supply Management (ISM) Report On Business.

The ISM survey placed the manufacturing PMI gauge at 46 in June, down from 47 in May and falling short of estimates (a rating below 50 reflects contraction). The latest June ISM Manufacturing PMI marked the lowest point since May 2020, when business activity plummeted due to Covid-19 restrictions.Timothy R. Fiore, chair of the ISM Manufacturing Business Survey Committee said “Demand remains weak, production is slowing due to lack of work, and suppliers have capacity.

There are signs of more employment reduction actions in the near term.” The most recent data confirms the stark contrast between the manufacturing sector’s contraction and the service sector’s continued expansion.

Of the 18 manufacturing sectors surveyed the Wood Products sector was among the 11 reporting contraction for the month while the Furniture and Related Products sector reported neither growth nor contraction in June. After several months of decline the furniture sector reported some encouraging findings: Furniture and Related Products reported an increase in orders for the second consecutive month as well as growth in production and employment in June.



Hardwood plywood from Vietnam ruled as a product of China- duties imposed
The US Department of Commerce issued its final determination that hardwood plywood exported from Vietnam using hardwood plywood inputs sourced from China is, in fact, a product of China. That means the plywood is subject to the antidumping duty (AD) and countervailing duty (CVD) orders on hardwood plywood from China. The Commerce Department’s International Trade Administration published notice of its determination July 20 in the Federal Register.

Thirty-seven companies were found to have failed to cooperate or failed to respond to the agency's investigation. The Commerce Department ordered US Customs and Border Protection to collect cash deposits from these 37 companies at the China-wide rates of 183% for AD and 23% for CVD.

In its ruling, the US Department of Commerce "determines that imports of certain hardwood plywood products (hardwood plywood), completed in the Socialist Republic of Vietnam (Vietnam) using plywood inputs and components (face veneer, back veneer, and/or either an assembled core or individual core veneers) manufactured in the People’s Republic of China (China), are circumventing the antidumping duty (AD) and countervailing duty (CVD) orders on hardwood plywood from China."

The Coalition for Fair Trade of Hardwood Plywood brought the circumvention case against imports from Vietnam in 2020 after imports from Vietnam spiked following the imposition of antidumping and countervailing duties on China.




Canadian wildfires expected to drive up US timber prices
Canada’s devastating wildfire season has impacted the largest amount of land ever recorded in a single year. As a result timber prices are expected to rise as Canada supplies approximately 80% of US softwood sawnwoodimports. However, it is too early to know how much of the affected areas include harvestable timber, as well as how much will be damaged in the coming months.

The Canadian provinces of Alberta and Quebec have been hit the hardest by the fires so far with around 3.8 million and 3.5 million acres burnt, respectively. Together, they account for 44% of Canada’s annual softwood sawnwood shipments to the US and 45% of total production. Canada’s weather conditions are expected to fuel more wildfires throughout the summer, which paints a grim outlook for timber prices.



LM       Loyale Merchant, a grade of log parcel  Cu.m         Cubic Metre
QS        Qualite Superieure    Koku         0.278 Cu.m or 120BF
CI          Choix Industriel                                                       FFR           French Franc
CE         Choix Economique                                                        SQ              Sawmill Quality
CS         Choix Supplimentaire      SSQ            Select Sawmill Quality
FOB      Free-on-Board     FAS            Sawnwood Grade First and
KD        Kiln Dry                               Second 
AD        Air Dry        WBP           Water and Boil Proof
Boule    A Log Sawn Through and Through MR              Moisture Resistant
              the boards from one log are bundled                      pc         per piece      
              together                      ea                each      
BB/CC  Grade B faced and Grade C backed MBF           1000 Board Feet          
              Plywood   MDF           Medium Density Fibreboard
BF        Board Foot F.CFA         CFA Franc        
Sq.Ft     Square Foot              Price has moved up or down
Source:ITTO'  Tropical Timber Market Report