Lower lumber profits echo poor shape of U.S. housing

Posted by Rumin Mann
July 29th, 2011

B.C.’s American exports dramatically down, with no sign of rebound anytime soon

Lacklustre second-quarter financial results coming from Canadian softwood lumber producers underline the continued importance of the United States housing market to the industry.

Canfor Corp. was the latest to report second-quarter figures showing a sharp drop in net income, to $26.2 million compared with $43.7 million in the same quarter of 2010, which it attributed to poor U.S. demand and a steep drop in North American prices.

Canfor CEO Don Kayne, in the company’s statement, said a record level of shipments to Asia during the second quarter were a bright spot, but “a sustained recovery of lumber markets and prices will not begin until there is a turnaround in the U.S. economy,” particularly housing construction.

Canfor noted that besides poor U.S. demand, a bulge in inventories due to bad weather helped push the price for the standard measure of lumber to an average $240 US per-thousand-board-feet during the second quarter, $56 lower than the previous quarter.

Last week, West Fraser Timber Co. Ltd. reported a steep fall-off in its second-quarter profit, down to $10 million from $67 million in the second quarter of 2010. Quebec-based Tembec also reported a loss on its lumber operations.

“Even though China is a very welcome addition [to the market] you really need the U.S. market to come back to really drive profitability,” industry analyst Kevin Mason said in an interview.

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