[colinchartier]

> Lumber tariffs had prices already rising a year ago, but then when the pandemic hit, production shut down. The expectation was that housing demand would dry up for a long time. But instead, after a brief pause, it came roaring back.

How can this be the case when lumber prices are surging in Canada as well? You'd expect that if the price was in response to tariffs then the origin country would be flooded with supply?

[throwaway0a5e]

The big bottleneck is mill capacity (as evidenced by the fact that timber prices have not increased much). Unexpected high demand is driving most of the rest of it. Both of those affect Canada as well. Tariffs are only a small part of the overall cost increase.

[totalZero]

If this is the case, then lumber should be backwardated right now.

checks the futures market

And indeed it is. May trades 40% above Nov on CME.

So if you want to buy a rural house, you can just....wait until a couple of years after the pandemic?

I don't know why you would rush to build a house right now, unless you want to live in technocrat-favored places like Austin and Denver that are seeing demand creation due to permanent WFH among Big Tech companies.

[spamizbad]

My understanding is the Canadian government put limits last year on how much timber could be cut. So their prices were going up no matter what.

[margalabargala]

Mills are the issue, not timber. There's an excess of raw timber right now, all of the wood from the wildfires in the PNW last year is being salvaged currently.

[idiotsecant]

it's not just firewood supplies (not sure how much that impacts the market, and the PNW has a more or less permanent fire season each year now anyhow) - The market has been glutted with raw timber for a decade. There has been a huge oversupply for quite a while. This continues to today - just because lumber mills are making money hand over fist doesn't mean raw timber producers are.

[vkou]

Marginally profitable mills shut down/go bankrupt when tariffs are introduced, and unlike AWS instances cannot be spun up on demand.

[kokanator]

Does it feel like we have squeezed a critical part of our infrastructure here allowing it to go bankrupt? This could have lasting affects for decades.

[cma]

They don't necessarily melt down the machines and recast them as ingots in a bankruptcy.

[vkou]

Canadian lumber has always been a political football for American politicians to kick around whenever they needed to score some points, so we're used to this sort of thing.

Like any resource extraction industry, it goes boom, it goes bust, it recovers.

[bluGill]

Production slowed down - less wood was cut. Then demand didn't drop as much as expected and so the supply is down a bit.