Lumber yard at Babine Forest Products, near Burns Lake, B.C. (File)

Closed mills, housing surge support a positive forecast for lumber industries

B.C. lumber producers have closed mills accounting for 18% of province’s capacity, RBC report says

Financial analysts say Canadian production cutbacks and a consumer-driven recovery in housing starts in the U.S. could mean better times for lumber and panel products this year.

In a research report, RBC analyst Paul Quinn estimates B.C. lumber producers have permanently closed mills accounting for 18 per cent of the province’s capacity, a move that is expected to help to bring North American supply in line with demand and support price increases.

He adds the closure of three oriented strandboard mills and part of another has removed about 9.5 per cent of North American OSB capacity.

RBC is forecasting that U.S. housing starts will increase by about 2.5 per cent this year to 1.3 million units, driven by strength in single-family housing, and there will be further gains in lumber demand from the adoption of “mass timber” methods which allow construction of taller wooden buildings.

Meanwhile, CIBC analysts are also bullish on the lumber sector in North America, given stronger housing starts this year and their estimate of a five per cent decline in supply from last year.

In a report, they say they expect a robust spring selling season, with lumber prices and producer share prices likely to rise.

“2019 was one of the worst years in memory for lumber and OSB companies, with most reporting significant declines in profitability and seeing their equity value deteriorate,” noted RBC’s Quinn.

“However, a number of positive developments have us feeling increasingly bullish.”

The Canadian Press

Like us on Facebook and follow us on Twitter

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Cullen confirmed as B.C. NDP candidate for Stikine despite party’s equity policy

Former Tahltan Central Government President Annita McPhee said the process made her feel “abused”

CityWest to expand into Vanderhoof

The company will provide internet, TV and phone services over fibre-to-the-home technology

B.C. snap election: What we know about candidates running in the Nechako Lakes riding

Premier Horgan called for a snap election Monday, Sept. 21.

Manslaughter plea entered for 2012 death

Two others earlier pleaded guilty in murder of Fribjon Bjornson

Citing stability, B.C. Premier calls snap election for Oct. 24

John Horgan meets with Lieutenant Governor to request vote

B.C. reports 96 new COVID-19 cases, one hospital outbreak

61 people in hospital as summer ends with election

Grand jury indicts police officer in Breonna Taylor death

Officer Brett Hankison was charged with three counts of wanton endangerment

First 8 months of fatal overdoses in B.C. have now exceeded 2019 death toll

Nine people died every two days in August, BC Coroners Service data shows

Attorney General of Canada defends Kelowna Mountie involved in rough arrest

Tyler Russell filed a lawsuit against Const. Siggy Pietrzak in June of this year

Join Black Press Media and Do Some Good

Pay it Forward program supports local businesses in their community giving

B.C. could be without a new leader for multiple weeks after Election Day: officials

More than 20K mail-in voting packages were requested within a day of B.C. election being called

Refresh of Liberal government’s agenda comes amid new looming COVID-19 crisis

Lockdowns saw fed spending soar to historic levels in effort to offset pandemic’s blow to Canadians’ livelihoods

BC Liberals must change gears from election cynicism, focus on the issues: UBC professors

COVID-19 response and recovery is likely to dominate platforms

Most Read