Canadian lumber producers West Fraser Timber (WFT) and Western Forest Products (WEF) have announced the biggest combined profit since 2006 as mills run at five year highs to feed the US housing rebound and near-record Chinese demand. Source: Bloomberg
Lumber mills in British Columbia ran at 86 percent of production capacity in the five months through May, compared with 82 percent for all of 2011, according to the Western Wood Products Association.
The industry is recovering from losses and mill closures during the four-year US housing bust. Some producers are capitalizing on orders from China even as the Asian economy slows.
It is estimated that industry in West Canada in 2012 will probably earn the most since before the housing decline and that next year is looking even better.
Western Forest will see its earnings climb 52 percent this year and more than double in 2013 to the highest since at least 2004 according to analysts.
In the US housing starts fell 1.1 percent in July as against June but the number of building permits climbed to an annual rate of 812,000, the most since August 2008. That suggests residential construction activity in the largest export market for Canadian lumber may extend gains in the second half of the year.
Canadian lumber exports to China were about 1.2 billion nominal board feet in the second quarter, the second-highest quarterly tally on record. Most of the Chinese imports are spruce, pine and fir.
