Just out today, a news release with a forecast of higher lumber prices due to a rise in US housing starts.
Good news for Canadians working in the forest industry, and their families who depend on those jobs.
MONTREAL - North American lumber prices are set to increase further in the coming couple of years as the U.S. housing market continues to strengthen from years of weakness, a new CIBC report predicts.
Spot prices for Western SPF softwood lumber made from spruce, pine and fir trees have steadily increased this year, rising 24 per cent since January to US $310 per thousand board feet in August.
That's nearly 41 per cent higher than the US $220 price set two years ago, when the U.S. house-building industry was still suffering from years of over-heated construction activity and a collapse in the mortgage lending industry.
Analyst Mark Kennedy says the futures market is suggesting lumber prices will soften over the next two to three months before strengthening early next year as the fundamentals of the U.S. market improve despite some recent mixed signals.
U.S. home building slipped in July after a strong improvement in June, but new permits rose to their highest level in four years.
Housing starts in the United States decreased 1.1 per cent from June to a seasonally adjusted annual rate of 746,000. However, new construction was up 21.5 per cent from a year ago and permits were 29.5 per cent higher.
The increases came as inventories of unsold new homes in the United States hit a 50-year low, home prices appear to have bottomed, and housing affordability is near a record high due to low interest rates.
Kennedy estimates that U.S. housing starts will reach 900,000 next year and just over one million in 2014.
At that level, he estimates lumbers price will reach about US $340 per thousand board feet by the first quarter. The price should average above US $400 if starts reach 1.4 million units per year.
That's good news for lumber producers in Canada that export to the United States and workers who have faced several years of challenges, Kennedy said.
Among the companies expected to benefit are Canfor Corp. (TSX:CFP), West Fraser Timber Co. (TSX:WFT), International Forest Products Ltd. (TSX:IFP.A), Conifex Timber Inc. (TSXV:CFF) and Western Forest Products Inc. (TSX:WEF), he wrote in a report.
Canada has shipped some 4.5 billion board feet of lumber to the U.S. in the first half of the year, up 6.5 per cent from the same period in 2011.
Source: Canadian Press (English)
No comments:
Post a Comment