10 Things We Learned at the Montréal Wood Convention 2026

Why It Matters

The shift signals a turning point for the softwood lumber sector, affecting pricing, investment decisions, and supply chain dynamics across North America and beyond.

Key Takeaways

• US‑Canada lumber tariffs exceed 35%, squeezing Canadian margins
• North American capacity contracts as BC mills close, South excess persists
• Demand recovery delayed to 2027 by housing deficit and inflation
• European spruce imports face cost headwinds, adding supply uncertainty
• Industry mood moves from despair to cautious optimism

Pulse Analysis

The tariff escalation on Canadian softwood lumber—rising from roughly 14% to over 35%—has fundamentally reshaped the cost curve for producers in British Columbia and Quebec. Variable costs now hover near $600 per thousand board feet, eroding margins and prompting further rationalisation. This cost pressure, combined with the Section 232 duty, forces U.S. builders to absorb higher material prices, tightening the construction supply chain and feeding into broader affordability concerns.

Meanwhile, the structural supply picture is evolving. Mill closures in 2024 eliminated about 3.6 billion board feet, and additional downtime has cleared much of the inventory overhang. Yet the US South still carries surplus operable capacity, and Canadian SPF mills operate below optimal rates. The net effect is a market moving toward equilibrium, but the balance is fragile, especially as British Columbia’s harvest has halved over five years, shifting volume to eastern Canada and the South.

Demand fundamentals remain solid despite short‑term headwinds. A persistent housing deficit of 1‑2 million units, robust home equity, and favorable demographics point to a rebound, but the Iran‑related energy shock and elevated mortgage rates postpone significant acceleration until 2027. When affordability improves, the sector is poised for its largest annual demand jump in the forecast horizon, offering opportunities for producers that can navigate the volatile, short‑cycle market environment.