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Lumber firms notching record quarter
But, analysts expect prices to cool as renovations, do-it-yourself projects abate
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MARCY NICHOLSON BLOOMBERG NEWS (WPNS)
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Logs sit stacked at the Groupe Crete Inc. sawmill in Chertsey, Quebec, in this file photo. Lumber prices have cooled recently along with a decline in house renovations.
(Bloomberg WPNS/Christinne Muschi)
North American lumber producers are expected to post another quarter of record profits this week, but most attention will be on the outlook, with prices for wood products stumbling and do-it-yourself renovations slowing.
Producers are building and expanding sawmills in the southern U.S., where costs are low and timber is plentiful, while boosting output on expectations that the surge in home building will continue. Some analysts warn that an oversupply may be building up, even with bottlenecks and supply constraints in British Columbia, Canada s biggest lumber exporter to the U.S.
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“The mills are all swimming in their wood now,” Kuta said. “We need to see take-away increase dramatically in the secondary, end-user markets and export markets to right the ship in cash,” he said, referring to the need for wood to be shipped from producers to lumberyards.
Sawmills will have a difficult time selling wood they can’t transport, and they need sales and shipments to flush out the existing high-priced inventory that is on the industry’s books right now.
Tumbling lumber prices are also “pieces of Canfor’s equation,” BMO’s Wilde said, noting the steep two-month collapse in pricing as do-it-yourself renovation demand has dropped by a reported 40 per cent at big-box retailers.
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British Columbia declared a state of emergency and Canfor Corp. said it would trim output as the fires snarl transportation and supply chains. Lumber futures jumped more than 7 per centin Chicago.
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The rebound extends wild gyrations that took lumber prices from a record high in May on a pandemic-fuelled construction boom to an eight-month low earlier this week after demand eased and supply was replenished. British Columbia is Canada’s biggest exporter of lumber to the U.S.
Lumber Surges Anew as Canada Wildfires Snarl Output, Shipments bnnbloomberg.ca - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from bnnbloomberg.ca Daily Mail and Mail on Sunday newspapers.