by Bill McBride on 4/09/2013
Demand for lumber is increasing, but demand is still far below the levels during the housing bubble. However supply is lower than during the bubble years too. There are several factors impacting supply including a large number of sawmills still idled (it takes time to restart), the impact of the Mountain pine beetle, reduced maximum cuts in parts of Canada, and the permanent closure of high cost mills.
Note: Here is a great series on the mountain pine beetle from the Vancouver Sun: Pine Beetle
The B.C. government estimates that of the 2.3-billion cubic metres of merchantable lodgepole pine in the province, the beetles have claimed 726-million cubic metres over at least 17.5-million hectares.
Last month the WSJ had an article about some producers increasing supply:
Much more capacity is needed.
Lumber prices are now near the housing bubble highs.