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Lumber boom to last say experts

After being a wallflower for what feels like an eternity, lowly lumber has finally joined the commodity party.


January 22, 2013
By The Globe and Mail

Lumber prices have surged to their highest level in nearly eight years, busting out of a slump and lifting the outlook for producers. The commodity’s comeback has been a roller-coaster ride, but in this latest phase, industry experts told the Globe and Mail that the highs will persist for longer while the lows won’t be as harrowing as in the past.

Lumber’s winning streak has been fuelled by a rebound in U.S. housing starts, robust exports to China, restricted timber supplies in Canada and a series of North American sawmill closures.

Chris McIver no longer winces when he looks at a map of his company’s sawmills in British Columbia, Alberta and the U.S. Southeast.

With the pain dissipating from an era of low lumber prices, he has turned optimistic and is pleased to see West Fraser Timber Co. Ltd.’s sawmills receiving a stream of orders from wholesalers and distributors.

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“The economy went into a recession in 2008, but the lumber business went into a depression,” said Mr. McIver, West Fraser’s vice-president of sales. “For the last five years we’ve been waiting for some sort of recovery, but we are really beginning to feel like things are getting better.”

“Historically, high lumber prices have been transitory, lasting only for a period of months. Lumber markets will still be volatile, but structurally, with the changes in supply and demand, we see a period of sustained higher prices,” said Daryl Swetlishoff, forest products analyst at Raymond James Ltd.

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