The balance of evidence points to moderately elevated lumber prices with above-normal volatility through Q4 2025. As of today (Sept 16, 2025), the forward curve prices late-2025 delivery near the high-$500s/MBF—with Nov ’25 around $586/MBF—implying a market that expects tighter supply than in 2024 but not a 2021-style spike. My base case is an average Q4 trading range of $520–$650/MBF, with upside tails if supply shocks persist or mortgage rates fall faster than expected.
What’s driving the call?
1) Policy -driven supply pressure from Canada
Final 2025 U.S. countervailing duty rates of ~12%–17% took effect in August, following a July step-up in anti-dumping rates; together they push combined duties for many Canadian producers into the mid-30% range. That materially raises the delivered cost of the marginal North American supply into the U.S. during Q4. Expect pass-through into prices, especially for Western SPF grades.
2) Persistent constraints in B.C. fiber and output
British Columbia remains structurally supply-constrained—years of beetle kill, wildfire impacts, and fiber-access issues have reduced annual output versus late-2010s levels, with ongoing curtailments and closures through 2024–2025. While not a new story, it keeps North America’s supply elasticities low: small demand bumps translate into bigger price moves.
3) U.S. South capacity helps—but doesn’t fully offset
The U.S. South added substantial Southern Yellow Pine capacity over the last decade, and 2024 capacity sat well above 2017; however, utilization drifted down and not all additions translate 1-for-1 into SPF replacement. Species substitution frictions and regional logistics keep spreads wide (SYP often discounts vs. SPF), limiting how much the South can cap prices in the near term.
4) Demand tone: tepid new-home construction, firmer R&R
Builder confidence is weak (NAHB HMI = 32 in September), suggesting soft single-family starts into year-end. But the remodeling/repair side looks steadier: Harvard’s LIRA points to modest growth through late-2025/early-2026, and retail indicators show homeowners continuing to upgrade in place. Net: overall demand is not booming, but R&R should keep a floor under consumption in Q4.
5) Macro rates backdrop: potential tailwind, but not a surge
Mortgage rates have eased from 2024 highs but remain historically elevated; the housing market likely needs rates closer to ~6% to materially re-accelerate. Most Q4 scenarios point to only incremental improvement—enough to support prices, unlikely to unleash runaway demand before year-end.
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Base case (55% probability): “Firm but contained”
- Average Q4 price: $520–$650/MBF
- Rationale: Canadian duties filter into U.S. pricing; B.C. supply stays tight; U.S. South capacity caps spikes; new-build demand soft, R&R modestly positive. Volatility persists, but backwardation/contango shifts are small.
Bull case (25%): “Rates break lower; winter logistics bite”
- Catalysts: A quicker drop in mortgage rates (Fed signals + tighter MBS spreads), early-winter rail/truck snarls, or incremental Canadian curtailments.
- Outcome: Brief moves >$700/MBF possible on squeezes; quarter-average drifts to $600–$720/MBF.
Bear case (20%): “Demand underwhelms; supply flows”
- Catalysts: HMI stalls, permits/starts lag further, European/US South flows meet demand, and hurricane/wildfire season proves benign.
- Outcome: Average slips toward $470–$530/MBF, with spot tests of mid-$400s if cash markets loosen.
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What to watch in real time (Q4 “dashboard”)
- Futures curve + cash basis — Track Nov/Jan contracts vs. cash SPF prints for tightening spreads; a rising cash premium often signals spot shortages. As of today, Nov ’25 ~ $586; a decisive breakout >$620 without new news would hint at short-covering rather than fundamentals.
- Duties & appeals — Any litigation/ministerial changes to AR6 rates could nudge delivered costs; watch Commerce/Federal Register updates.
- B.C. wildfire/log supply bulletins — Late-season fires or logging curtailments can tighten SPF quickly.
- NAHB HMI, permits/starts, and LIRA updates — Sentiment or remodeling inflections will move the demand needle.
- Mortgage rate moves & MBS spreads — A narrowing spread or policy shift on the Fed’s MBS runoff would support housing-adjacent demand.
Risks to the view
- Upside: Additional Canadian curtailments; extreme weather (storms, early freeze) disrupting logistics; sudden demand pulse from rate-driven new-home buyers.
- Downside: A softer macro print that keeps buyers sidelined; stronger-than-expected SYP substitution; elevated mill runs in the South absorbing orders.
A Final Word
Q4 2025 is set up as a “tight but not panicked” lumber market. Elevated North American trade frictions and constrained B.C. supply keep a floor under prices; remodeling demand helps, while still-weak builder sentiment caps the upside unless mortgage rates break lower. The futures curve sitting in the high-$500s looks broadly fair to slightly conservative given the duty step-ups—so $520–$650/MBF as a working band makes sense absent fresh shocks.
