RUSS TAYLOR
As seen in Truck LoggerBC Summer 2025
BRITISH COLUMBIA – US market conditions have been lackluster since the Trump tariffs on Canadian lumber were postponed for the second time in early April. Since early March, W-SPF 2×4 #2&Better random lengths (FOB BC mill) prices have declined almost 25 per cent from US$570/Mbf (US$368/m3) to a low of US$437/Mbf (US$282/m3) in early May before rising to US$465/Mbf in early June.
Similarly, in late May, E-SPF 2×4 (delivered Great Lakes) prices declined 14 per cent from US$640/Mbf (US$413/m3) to US$545/Mbf (US$353/m3) in late May and was trading at US$560/Mbf in early June.
In other words, US SPF lumber prices rose through March, but this was strictly tied to the potential implementation of 25 per cent Trump tariffs being applied on Canadian lumber and not from market demand. Today’s lower prices put BC Interior SPF mills back near break-even levels (on an Earnings Before Interest, Taxes, Depreciation, and Amortization–EBITDA–basis) at current lumber prices and with 14.4 per cent duties, with other Canadian regions looking to be margin-ally profitable.
Curtailments are already occurring in Quebec, as Arbec Forest Products (~800 million Bf capacity) announced it is shutting down indefinitely due to weak market conditions. With tariffs currently in suspension mode, the US market fundamentals have now been exposed; the market is weak and remains weak and there is too much supply relative to softening lumber demand.
In about August, Canadian lumber will be subject to elevated US import duties (rising from the current 14.4 per cent to near 34.5 per cent). This factor alone will require Canadian lumber prices in the US market to rise by another 10 per cent to an even 20 per cent. Any tariffs imposed on Canada and/or other countries will only increase lumber prices further to attract enough imports into the US market. If prices do not rise enough from tariffs that are established, then expect mill curtailments in BC.
No one knows if or when tariffs could be applied to timber and wood products as well as derivative products from the United States’ Section 232 investigation (into the potential threat to national security) and what the tariff levels might be by country. If tariffs are applied, that will cause some major dislocations to the BC and Canadian lumber industry, as higher costs for imported lumber will ultimately cause US lumber prices to rise. How much of the tariffs (or Canadian duties) are passed on to the consumer is the only wild card.
The US definitely needs imported Canadian lumber despite the US noise to the contrary. However, the US was by far the dominant market for Canadian lumber in 2024:
• The US represented 67 per cent of total BC lumber shipments and 59 per cent for all of Canada.
• The US represented 77 per cent of total BC lumber exports and 90 per cent for all of Canada.
In 2024, 87 per cent of all BC lumber production was exported, and the balance (13 per cent) remained in Canada. Aside from the US, all other markets for BC lumber are now relatively insignificant. The next two largest markets are China representing 9.4 per cent of shipments and Japan at 6.7 per cent. Unfortunately, both markets face many headwinds with little growth prospects, including an aging population and slow housing demand, not to mention increased competition from other offshore suppliers. The rest of the world for BC represents less than 7 per cent of exports, led by Taiwan (2.2 per cent), Other Asia (1.6 per cent), and the EU (1.1 per cent).
It appears that as production levels in BC plummeted after 2018, BC lumber companies narrowed their focus to the US market and have dropped out or reduced shipments to most offshore markets (see chart).
Chart courtesy of Russ Taylor
Between 2018 and 2024, total BC lumber production plunged by 48 per cent with lumber shipments to the US dropping by 2.1 billion board feet (-32 per cent) as compared to total offshore exports declining by a more significant 2.35 billion Bf (-66 per cent). With excessively high log costs for most of that period, BC mills appear to have focused more on the US market where they were more competitive and have slowly withdrawn from the more competitive offshore markets.
Many pundits suggest that the solution to BC and Canada’s reliance on the US market is to simply diversify markets. If that was easy, it would have been done years or even decades ago. In fact, Canada Wood’s overseas offices have been wound down dramatically due to the limited market potential for BC (and Canadian) lumber in offshore markets. As a result, it has not been easy for BC mills to grow in offshore markets, especially Interior SPF mills.
Only in North America do you find imperial thicknesses, widths and lengths for lumber, and especially in planed 2×4 to 2×12. There are a few exceptions; Australia, New Zealand and the UK have imperial sizes, but not in North American sizes. Japan and China import imperial dimension sizes from BC and Canada, but these volumes have diminished in the last ten years.
The rest of the world produces metric-sized lumber with a heavy proportion of rough sawn lumber (sawnwood). The rest of the world trades in metric lumber (and in single species, not mixed species like SPF) and North American sizes and grades do not fit many, if not most, end-use applications. For example, mills in Europe, Australia, New Zealand and South America process logs differently than in Canada and the US. These countries have installed expensive log merchandisers that presort logs into specific diameters, lengths and grades before milling.
This extra capital investment allows mills to batch logs for a specific market, product or end use, creating value-added lumber with little to no fall-down grades. This means that European sawmills can target all of Canada’s lumber markets, but BC Interior mills are heavily restricted to the offshore markets they can service with their imperial lumber sizes. In the end, BC’s sawmills are most effective in the US market because of its lack of log merchandising and species sorting options. While some Interior mills are better configured to produce some metric lumber (and do), the vast majority are not.
The BC Coast has always been able to produce metric-sized lumber and have been present in many markets as a result. While struggling somewhat with competitiveness against other exporters, BC Coast mills have become more limited in their offshore market fit.
Unfortunately, BC Interior mills are configured mostly for the US market. This has always been a logical market, but President Trump’s potential tariffs and trade policies may be huge obstacles to navigate for BC mills as they already have the poorest sawmilling margins in North America.
Russ Taylor is President of RUSS TAYLOR GLOBAL
