Sunday, October 26th7.7°C
23888
23129

Lumber chops down US competition

British Colombia's share of Chinese softwood lumber imports is growing even before overall demand accelerates as American producers pull back to supply their own improving domestic housing market, an industry analyst said Wednesday.

The province exported 5.4 million cubic metres of softwood lumber during the first nine months of 2012, a drop of 1.5 per cent from a year earlier. But overall Chinese lumber imports declined nearly five per cent.

"So B.C.'s actually taken some share from other exporters," Mark Kennedy of CIBC World Markets said in an interview.

He said the performance is positive despite lower shipments in light of the "almost hard landing" of the Chinese real estate market that started midway through 2011.

The slowdown suggested a 15 to 20 per cent pullback in lumber demand, but the drop in total imports was far more modest.

Canadian lumber is used primarily in China for concrete forms in apartment building construction, furring strips used to attach drywall and flooring, and for trim, door and window frames.

China imported 1.86 million cubic metres of lumber in November, up nearly 15 per cent from the prior month and slightly below volumes shipped a year ago.

Kennedy said the growth of Chinese imports will depend on stimulus programs adopted by the new government and its support for social housing.

"I think the positive news is that we aren't going to see any further declines in their lumber imports, so we've certainly flat-lined or maybe we'll see some modest growth and then that growth could start to accelerate into the back half of 2013."

Growth of 10 to 15 per cent is "reasonable" as North American lumber shipments could expand by 50 per cent to six billion board feet in three to four years, he added. Western lumber producers in B.C.'s interior and coastal regions account for more than 80 per cent of those exports.

Increased Chinese demand, coupled with a recovery in U.S. home construction, should continue to boost lumber prices and eliminate softwood lumber duties as of January. Lumber prices have increased by more than US$100 per thousand board feet over the last year to reach US$360, above the duty threshold.

The leading beneficiaries include West Fraser Timber (TSX:WFT) and Canfor (TSX:CFP), Western-based producers which together paid nearly $100 million in duties last year.

"Canada really finds itself in a unique situation now because you've got both the U.S. market as its housing market recovers asking for lumber, as well as the Asian market."

International Wood Markets expects Canada's lumber production will plateau by about 2015 as it feels the effects of the mountain pine beetle epidemic in the B.C. Interior and Quebec's decision to permanently reduce its timber harvest by at least 30 per cent between 2004 and 2013.

"By the end of the decade, B.C. and Quebec lumber shipments will collectively be lower by some 10 billion board feet as compared to peak shipments in 2004."

The industry group expects that increasing U.S. housing starts will help to propel North American lumber prices to new highs next year and record levels in 2014.

The Canadian Press


Read more Business News

23028


Recent Trending




Today's Market
S&P TSX14543.82+56.99
S&P CDNX805.45-3.15
DJIA16805.41127.51
Nasdaq4483.715+30.923
S&P 5001964.58+13.76
CDN Dollar0.8901-0.0003
Gold1231.20+2.10
Oil81.02-0.73
Lumber336.40+6.80
Natural Gas3.631+0.009

 
Okanagan Companies
Pacific Safety0.105-0.005
Knighthawk0.01-0.005
QHR Technologies Inc1.15-0.02
Cantex0.07+0.015
Anavex Life Sciences0.194-0.004
Metalex Ventures0.045+0.005
Russel Metals33.39+0.23
Copper Mountain Mining2.03-0.05
Colorado Resources0.145+0.005
ReliaBrand Inc0.012-0.001
Sunrise Resources Ltd0.05-0.01
Mission Ready Services0.445+0.035

 



23631

FEATURED Property
20794703357 Larkspur Court
5 bedrooms 4 baths
$998,000
more details
image2image2image2
Click here to feature your property
Please wait... loading


What I learned in China

Photo: ContributedI will never be an expert on China. It is just too big, too complex and too old with layers of history and meaning that would take several lifetimes to unravel. As I said to my hosts...


We can get on together

I was in LA this week. I witnessed such crazy and unusual circumstances as I strolled along Hollywood Blvd and Sunset Blvd. A far cry from sleepy Peachland in the Okanagan! The strange thing was, I f...


Weakening global growth worries

The Big Picture Growth worries persist Worries about weakening global growth and its potential impact on the US economic recovery roiled markets around the globe this week. Europe continues to be the ...

_








Member of BC Press Council


22707