Plunging lumber prices pose warning sign for U.S. economy - WSJ

[Sawmill]
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Wood prices have plunged 23% since early August and lumber mills are cutting back [https://www.wsj.com/finance/commodities-futures/lumber-prices-are-flashing-a-warning-sign-for-the-u-s-economy-2119c5dc] due to a building slump and uncertainty over tariffs, in a signal of potential problems in the U.S. economy, _The Wall Street Journal_ reported Monday.

The price decline to $535 per 1,000 board ft (LB1:COM [https://seekingalpha.com/symbol/LB1:COM]) as of Friday might have been greater, as two of North America's biggest sawmills said recently they will reduce production, slowing the decline.

Interfor (OTCPK:IFSPF [https://seekingalpha.com/symbol/IFSPF]), North America's third-largest lumber producer, said last week [https://seekingalpha.com/pr/20220918-interfor-announces-lumber-production-curtailments-across-all-regions-of-north-america] it will cut production by 12% across its sawmills in the U.S. South, Pacific Northwest, British Columbia and eastern Canada, and Domtar said it will take downtime at its sawmill in Arkansas, indefinitely idle another in Quebec, and eliminate a shift at another facility in the province.

Analysts say weakening wood prices are troubling because they have served as a reliable leading indicator of the direction of the housing market as well as broader economic activity.

Lumber prices have been volatile, rising in the spring after the Trump administration said it was investigating national security aspects of imported lumber and threatened steep tariffs on all Canadian goods, then crashing when Trump backed off Canada, then surging again in May as buyers began stocking up ahead of the scheduled increase in existing Canadian lumber duties and Trump's threatened tariffs.

Any new wood tariffs from Trump would be separate from existing antidumping and countervailing duties on Canadian softwood lumber imports, which are the result of a decades-long trade dispute and rose last month to ~35% for most Canadian producer, from 15%.

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