British Columbia’s softwood lumber industry is finally on the comeback trail, fuelled by a recovery in U.S. housing starts and steady demand from China.
“The outlook for the softwood sector in general is quite positive over the next few years as we go through a growth cycle,” said David Elstone, a senior analyst with ERA Forest Products Research.
He is predicting U.S. housing starts of 835,000 in 2013 and 950,000 in 2014, up from an industry forecast of 746,000 this year. “We’re rising out of a trough in U.S. housing starts,” said Mr. Elstone, who noted that Vancouver-based lumber producers such as Canfor Corp., West Fraser Timber Co. Ltd. and Conifex Timber Inc. will be among the beneficiaries of the market’s rebound.
With softwood lumber prices strengthening in 2012, producers are expected to report healthy third-quarter financial results.
The Random Lengths framing lumber composite price, which is closely watched by the forestry industry, averaged $264 (U.S.) for 1,000 board feet earlier this year, but surged 27 per cent since then to surpass $336 in September.
A seasonal slowdown is inevitable as colder weather reduces demand for lumber at construction sites, but prices are forecast to stay robust, compared with last year’s fourth quarter.
While much of the focus in 2012 has been on the U.S. housing market being on the mend, the trend of strong demand from China in recent years is expected to continue.