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Lumber Prices Jump to Six-Year High on China, U.S. Demand

Lumber Jumps to Six-Year High as Demand From China, U.S. Climbs
Lumber will lead commodity gains in 2013, according to Scotiabank Group. Photographer: Daniel Acker/Bloomberg

Dec. 24 (Bloomberg) -- Lumber futures jumped to the highest in more than six years as inventories shrink on increased demand for building supplies in China and a rebound in U.S. home construction.

China will build stockpiles in 2013 after “substantial” mill closures across North America in the past six years, boosting prices for wood products, according to Scotiabank Group. Lumber will lead commodity gains in 2013, the Toronto-based bank said. In November, U.S. building permits, a proxy for future construction, climbed to a four-year high, government data showed on Dec. 19.

“China is going to go through a restocking cycle,” Jamie Greenough, a broker at Global Securities Corp. in Vancouver, British Columbia, said in a telephone interview. “Inventories are quite low in the U.S. If you need lumber, you’re getting forced into the market to cover your requirements.”

On the Chicago Mercantile Exchange, lumber futures for March delivery gained by the limit of $10, or 2.7 percent, to settle at $384.50 per 1,000 board feet at 12:12 p.m., the highest for a most-active contract since Jan. 12, 2006. The price has soared 47 percent in 2012, heading for the biggest annual increase since 1993.

U.S. Economy

U.S. consumer spending and demand for durable goods climbed in November, indicating the economy strengthened heading into the current impasse on tax rates and spending cuts.

Household purchases rose 0.4 percent, compared with a 0.1 percent decline in October, government data showed on Dec. 21. Orders for durable goods jumped 0.7 percent, more than twice the 0.3 percent advance forecast by economists.

China’s housing sales in November climbed 18 percent to 595.8 billion yuan ($96 billion) from a month earlier, the government said on Dec. 18. New home prices in November rose in 53 of 70 cities the government tracks, the most in 18 months.

“The big story seems to be that China is grabbing up a lot of the production, leaving less available for the world market,” Greenough said. “What you have is a lot of people requiring wood and drawing from a limited supply.”

Lumber settled $10 higher on Dec. 21. This quarter, the price has surged 38 percent

Wheat futures in Chicago have climbed 22 percent this year, leading 24 raw materials in the Standard & Poor’s GSCI Spot Index. Lumber isn’t included in the benchmark gauge.

To contact the reporter on this story: Tony C. Dreibus in Chicago at

To contact the editor responsible for this story: Steve Stroth at

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