Industry News
Music to our Ears

A quiet walk through the forest it was not. And that was a good thing.

All the noise I heard walking the exhibition  grounds at DEMO International 2012 in Quebec over three days represented the gathering of an industry on the cusp of a revival.

The sound coming from Gestion Solifor’s La Seigneurie de Perthuis property, 75 kilometres outside of Quebec City, was a mixture of logging equipment going through its paces and more than 8,500 visitors making their way around a nearly three-kilometre loop populated by nearly 100 exhibitors from across the country and around the world.

Watching some of the best operators in the land operate these massive and complex machines was impressive indeed and from talking with some of the exhibitors I got a sense that I wasn’t the only one impressed. Many of the manufacturers and distributors on site expressed great satisfaction with the number of “quality leads” they obtained during the show.

Another positive coming out of the event was the presence of several groups of students, which according to Peter Robichaud, executive director of the Canadian Woodlands Forum, instils confidence in the future of the forestry industry in North America.

The Canadian Woodlands Forum conference that preceded DEMO was aptly titled “Canada’s Forest Sector at a Turning Point” and featured timely topics to address the question of “what approach to forest land-use, management, silviculture and harvesting operations will best fit the ecological function of our forest, meet the needs of the new forest products industry and mesh with the values of society?”

More than 30 speakers from across Canada addressed such topics as global forest economics, First Nations forestry, ecosystem management, forest biomass and its potential, wildlife, the multiple uses of wood, ecological forest services, new logging practices, carbon and the forest industry, and the labour force.

More Good News
Other signs also point to the recovery trend continuing. A report by CIBC World Markets predicts that North American lumber prices are set to surge in the next couple of years amid a tightened supply from Canada as the U.S. housing market continues to strengthen.

Spot prices for western softwood lumber made from spruce, pine and fir trees have steadily increased this year, rising 24 per cent since January to US$310 per thousand board feet in August.

That’s 40 per cent higher than two years ago, when the U.S. house-building industry was still suffering from years of overheated construction activity and a collapse in the mortgage lending industry.

According to the report, higher prices are expected to be supported by significant curtailments in North American production capacity, reduced supply due to mountain pine beetle in British Columbia, increased sales to China and pent-up demand in the United States.

The report estimates that U.S. housing starts will reach 900,000 next year and just over one million in 2014; at that level, it says, lumber prices should reach $340 per thousand board feet by the first quarter of 2013 and could top $400 if starts reach 1.4 million units per year in 2014.

That would be great news for lumber producers.

“As sawmill operating rates hit 80 per cent, we expect lumber prices to move meaningfully and sustainably (higher) … which in turn, should prompt a period of significant profitability for the lumber producers,” states the report.

That’s music to the industry’s ears.

John Tenpenny, Editor
jtenpenny@annexweb.com

October 24, 2012  By  John Tenpenny