North American Wood Products Industry in 2015 and Beyond

North American Wood Products Industry in 2015 and Beyond

Forest Economic Advisors — Conference Call with BMO Capital Markets

Last week was held a regular conference call about the North American wood products industry by Mark Wilde at BMO Capital Markets. Analysts at Forest Economic Advisors provided the update.

US Housing

• FEA pessimistic on US housing starts relative to consensus:

  • 1.1 million starts estimated for 2015;
  • Between 1.25 and 1.3 for 2016;
  • Closer to 1.5 million in 2017-18.

There is underlying demand for 1.5 million starts annualized, but as a longer term optimism
• Housing starts are at a very low level relative to population, there are 2.5 to 3 million more Americans every year

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SOURCE: Forest Economic Advisors

• House prices vs. rents are moderating to historical average, and mortgage rules are loosening

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• Pent-up demand represents more than 3 million units, to recover from steep drop after the spike in new home building

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Lumber Markets

• US home builders are increasing their inventory, there is a surprise on the up- side as housing starts will come in higher than expected
• Canada and US lumber exports to China are way off, mainly due to exchange rate (strong Canadian and US dollars, weak Renminbi)

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SOURCE: Forest Economic Advisors

• Russian wood is available at a discount in China, but as the Ruble strengthens customers will turn back to North American suppliers.

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