Slow Demand, Rising Production Stalls Lumber And Panel Markets

by | Dec 21, 2015 | News

New WOOD MARKETS five-year forecast calls for continued volatility as North American and global lumber markets continue to recover and grow.

In WOOD MARKETS’ new five-year forecast, the short-term outlook is that North American and global economies, as well as softwood lumber and panel markets, are all forecast to improve, but at a much slower pace than has been expected. What has also short-circuited the prospects of stronger demand is a slowdown in China and Japan, impacting export markets. And the new wildcard that caused U.S. dollar prices to plunge in 2015, especially in softwood lumber, was the rapid currency devaluations of almost all major lumber producers as compared to the U.S. dollar. All of these factors have changed the WOOD MARKETS outlook to one that expects more lacklustre demand and corresponding price growth through 2018. After that, it starts to look very good.

These details and further analysis of commodity lumber and panels was released last week in the report, WOOD MARKETS 2016 – The Solid Wood Products Outlook: 2016 to 2020 by International WOOD MARKETS Group, Vancouver BC.

The supply-side dynamics feature eroding sustainable timber harvests in key provinces in Canada, resulting in dramatically lower lumber production than in the previous decade. Canada’s total lumber output will start to flatten out by 2018 with no further increases expected – just as U.S. and global demand are expected to gain momentum.

On the U.S. side, the U.S. West Coast region continues to watch log export prices in China and Japan, as many domestic log prices are correlated with export prices – this can quickly tighten the wood supply for sawmills and plywood mills as export prices rise. The U.S. South is forecast to be the only region where any significant lumber and panel production will occur, mainly due its ample, under-utilized timberland base of southern yellow pine. As lumber and panel demand increases, it is forecast that the current depressed log prices will start to move higher to feed incremental wood consumption of the expected additional panel and sawmill production.

From Wood Markets: https://www.woodmarkets.com/global-malaise-in-demand-coupled-with-rising-production-stalls-price-movement-in-north-america/

Shrinking Timber Supply Sends B.C. Companies On U.S. Mill Buying Spree

by | Feb 27, 2015 | News

At first blush, year-end financials and stock prices for B.C.’s largest forest companies would suggest the province’s forestry sector is well on the road to recovery after a decade-long slump.

Interfor Corp., for example, posted record sales of $1.4 billion in 2014 and record production of 2.2 billion board feet. Stock values and market caps of B.C.’s three largest forestry companies – Interfor, Canfor Corp. and West Fraser Timber Co. Ltd. – have soared since the end of 2011. Canfor’s share prices have increased almost 180%, West Fraser’s more than 220% and Interfor’s a whopping 410% since the end of 2011. Based on market cap ($6 billion), West Fraser is now B.C.’s seventh-largest publicly traded company.

But that increase in production and stock value is largely attributable to recent acquisitions of sawmills in the U.S., not to a boom in their B.C. operations. In fact, Canfor and Interfor have both closed mills in B.C. in recent years. Warmer winters that led to a massive die-off of pine from the mountain pine beetle infestation are largely to blame.

B.C.’s largest forestry company, West Fraser, now owns 15 American sawmills, compared with just seven in B.C. and five in Alberta. About 36% of its shipments of lumber now come from its U.S. mills, said Rodger Hutchinson, West Fraser’s vice-president of investor relations. Interfor owns five sawmills in B.C., nine in the U.S. and will add another four U.S. mills this year. About 43% of Interfor’s current production capacity is in B.C., 57% in the U.S. Canfor owns 12 sawmills in B.C., one in Alberta and 10 in the U.S. It also owns four pulp mills in B.C., one wood bioenergy plant in Alberta and one in B.C.

From Business Vancouver: https://www.biv.com/article/2015/2/shrinking-timber-supply-sends-bc-companies-us-mill/