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.
• 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
• House prices vs. rents are moderating to historical average, and mortgage rules are loosening
• 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)
• Russian wood is available at a discount in China, but as the Ruble strengthens customers will turn back to North American suppliers.