MONTREAL - North American lumber exports to Asia were down sharply in March, held back by a Vancouver port strike, according to a U.S.-based trade industry association which found exports to China fell nearly 42 per cent from the prior year while exports to Japan plummeted 59 per cent.
However, the Western Wood Products Association said improvements in North American markets meant that overall shipments by Canadian and U.S. producers were down just 1.9 per cent year over year. Overall Canadian shipments decreased 4.8 per cent while U.S. shipments were 0.4 per cent higher even as both countries saw deliveries grow 8.4 per cent from February.
North American lumber production increased 3.1 per cent in March to 4.7 billion board feet. Canadian production rose 2.4 per cent to 2.1 billion board feet in March, up 10.1 per cent from the prior month. B.C. output increased 10.8 per cent while the rest of Canada was up 9.4 per cent.
Lumber use in Canada rose 31.1 per cent to 678 million board feet or 14 per cent of North American production, while U.S. consumption fell 0.8 per cent to 3.3 billion board feet.
North American lumber inventories increased 5.8 per cent from February to 6.5 billion board feet, due to rail shipment delays and the Vancouver port strike.
Lumber prices have fallen 12 per cent so far this year after rising 19 per cent in 2013.
Paul Quinn of RBC Capital Markets expects prices will decrease four per cent in 2014 to US$340 per thousand board feet, before increasing 15 per cent to US$390 in 2015 and US$415 in 2016.
Canadian lumber producers Canfor Corp. (TSX:CFP) and Western Forest Products Inc. (TSX:WEF) said in April that shipments had been affected by weather-related transportation issues and the port strike. They expected a rebound in the second quarter as warmer weather contributed to stronger residential construction demand.
RBC estimates U.S. housing starts will surpass one million in 2014 for the first time since the recession, reaching 1.1 million units followed by 1.25 million in 2015 and 1.35 million in 2016.
Follow @RossMarowits on Twitter