Lumber futures have recently seen a sharp decline in the United States, reflecting increased uncertainty around residential construction. On the Chicago Mercantile Exchange, contract prices dropped below 580 US dollars per thousand board feet – a decrease of 19.5 dollars, or three point three per cent.
– This marks a significant drop compared to late March, when prices temporarily reached 685 dollars, the highest level in two and a half years.
Futures are agreements between two parties to buy or sell a commodity at a fixed price at a future date. These contracts mirror market expectations, and the recent downturn signals mounting pessimism about upcoming building activity in North America – a development that could ripple through to European producers as well.
Trade tensions behind market shift
The background to the falling prices lies in the escalating trade conflict between the United States and several of its key trading partners. New tariffs from the White House on steel and aluminium have already sparked concern, and more decisions may be coming – possibly targeting lumber.
– EU member states are now preparing to vote on a first package of retaliatory tariffs against American imports. According to the Finnish newspaper Kauppalehti, these could include lumber products from the US.
Such a move would raise the risk of Washington responding with duties on European wood – something that would hit Swedish exporters directly. Meanwhile, existing tariffs are already fuelling market unease. The US has long imposed steep duties on Canadian softwood lumber, raising material costs for builders.
– Additional tariffs could squeeze the construction sector even further, dampening demand and slowing down building starts.
Higher construction costs may hit households
The proposed tariffs from the US administration are also expected to affect household budgets. According to estimates from Trading Economics, the new measures could increase the cost of building an average American home by around 6,400 US dollars – roughly 5,860 euros.
– If building costs continue to rise, the risk of a broader construction slowdown grows – which could negatively impact the lumber industry in both North America and Europe.
Several voices from the construction sector warn that a deepening trade conflict could have a cooling effect on the broader economy. A drop in construction activity would not only affect demand for materials but also employment and exports, including in the Nordic region.
Source: Kauppalehti
