On the face of it, the sharp rise in lumber prices over the past several weeks should be welcome news for Canada’s recession-battered forestry companies.
But industry players are not prepared to relax their cautious stance quite yet as they search for signs that a true recovery in the critical U.S. housing market – a major buyer of Canadian lumber – is taking hold.
For West Coast lumber giant Canfor Corp., indications of a sustainable recovery of the U.S. housing construction market are not, so far, apparent.
“We still really feel the price increases we have seen are supply-driven,” Canfor spokesman David Lefebvre said.
Prices have increased to reflect the reduced supply but there is no actual upswing in demand.
“The elements we’re looking at include housing starts and an increase in demand, but we’re not seeing that right now,” Mr. Lefebvre said.
The market remains volatile, said Russell Taylor, president of Vancouver-based consultancy International Wood Markets Group.
“In 2009, we hit prices we thought we would never see, at below cost, and housing starts at all-time lows. It was a brutal year. Now, all of a sudden, there is this kind of bubble,” he said. “These prices have no technical support and can only go down, but it will take several weeks.” Read More