The US housing market is stumbling, which makes two of Canada\u2019s top lumber producers, West Fraser Timber Co. and Canfor Corp., to suffer from a lower demand from\u00a0the US.<\/p>\n
According to Bloomberg, the US housing starts dropped 8.8% in March and its weakness can\u2019t support the lumber prices at its current levels. The US is the biggest market for Vancouver-based Canfor and West Fraser, which manage timberlands in British Columbia that supply softwood such as Spruce-Pine-Fir, a widely used material used to construct house walls and roofs.<\/p>\n
Moreover, the south Canadian producers are already facing lower demand from China and suffer from the impact of the mountain pine beetle on the forests in BC. Thus, West Fraser declined by 15% in Toronto this year and Canfor was affected by a 24% drop. None of the companies commented on the lumber outlook, but are due to report Q1 earning next week.<\/p>\n
As Bloomberg reported, Canfor\u00a0Chief Executive Officer Don Kayne, said in February that there would be an 8% growth in US\u2019s demand for 2016 thanks to the housing improvements. Yet, Chris McIver, sales and marketing vice president of West Fraser, said that the US housing recovery won\u2019t be as good as expected.<\/p>\n
The low supply of available land and the prices that rose faster than the wages affected the American, causing the US housing market to drop. The residential housing starts from March dropped to an annual rate of 1.09 million, which is poorer than economists\u2019 estimates. Also the issuance of private housing permits declined in March.<\/p>\n
Moreover,\u00a0lumber May delivery closed at $282.60 per 1,000 board feet in Chicago and it will remain unstable for the rest of 2016, according to Bloomber. The American companies will be able to file trade cases against the Canadian importers only once with a trade agreement between the two nations, after the 2006 SLA expired in October last year and holds a standstill period until October 2016.<\/p>\n
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The US housing market is stumbling, which makes two of Canada\u2019s top lumber producers, West Fraser Timber Co. and Canfor Corp., to suffer from a lower demand from\u00a0the US. According to Bloomberg, the US housing starts dropped 8.8% in March … Continue reading