Canfor Customer Update
Welcome to our latest edition of the Canfor Customer Update. Your feedback is appreciated, and helps us identify the topics that are most important to you.
Q1 is behind us and we are generally pleased with the pace of business in our major markets. It was an unseasonably mild winter in most of North America, and that created a better-than-expected pace of business in both new home as well as repair and remodel markets. That mild weather allowed job sites in the northern half of the US and in Canada to be busier. The longer building season that resulted, will alleviate some of the labour shortage concerns by allowing for more work hours by the same number of framers. This is generally seen as a boost to the overall consumption for the year. While it may end up as conservative, our US housing start forecast remains at 1.2 million units for 2016.
SYP markets were good, with Q1 prices slightly ahead of Q4. Consumption was steady, MSR was solid and by the end of the quarter, wide widths were very strong. Logs were tight across the region due to the heavy rains throughout much of the quarter.
SPF prices steadily gained through the quarter, finishing above forecast. Stable offshore business combined with the aforementioned mild winter at home, led to consumption keeping pace, or slightly ahead of production.
Overall, we see prices for all SPF being up 15-20.00 on average for Q2 versus Q1, while SYP is basically flat.
Over in Asia, export volumes to China began to rebound beginning in Q4 2015 and are now returning to normal stabilized volumes. Shipments have returned to better-than-expected export levels affirming that inventories have been diminished and that there is a mild rebound in construction activity that had decreased considerably last year.
We are optimistic that 2016 will be better than 2015 and look forward to working together towards a mutually successful year ahead.
Softwood Lumber Agreement Update
The Softwood Lumber Agreement, which expired last October, continues to be a priority for the industry. A significant step towards a resolution took place last month when both Canadian Prime Minister Justin Trudeau and U.S. President Barack Obama met and discussed the topic in Washington. Both leaders stated that they will work to resolve the issue and further demonstrated their commitment by stating that they both hope to settle the agreement within weeks or months and to regroup 100 days after their March 10 meeting.
This commitment from both leaders has reaffirmed our optimism that a resolution will be reached before the one-year standstill period ends this October.
We will continue to keep you updated on future developments.
Changes to LEED Certification
On April 5, the US Green Building Council (USGBC) announced changes to the LEED rating system to now include SFI, CSA, PEFC and ATFS. Builders and architects who choose products certified to these standards can now achieve points towards LEED certification. Previously, points were only awarded to wood products meeting FSC standards.
At Canfor, we believe this dramatically increases the supply and availability of third party certified lumber products, which can drive even more innovative green building projects. This decision should lead to increased market share for lumber in the fast growing "green building" market.
Canfor is one of the only major forest products companies that offers products certified to each of the major forest certification programs – CSA, FSC, SFI and PEFC. This announcement from USGBC expands recognition for our certified products and for the use of wood in the LEED rating system.
Increased Demand in India
When comparing India’s demand for hardwood and softwood lumber products, there is a switch underway towards softwood. This is due to the shortage in the supply of hardwood. Although this upward trend in softwood lumber demand won’t impact prices in the short term, it is likely to be a part of the conversation in the near future. Here at Canfor, we will continue to closely monitor this market.
Supporting the Continuation of the Softwood Lumber Board
Since its creation in 2011, the work of Softwood Lumber Board (SLB) has significantly and positively contributed to the softwood lumber industry. Through its research, promotions and consumer education, the SLB’s efforts concretely benefit our industry by increasing the demand for softwood lumber.
Canfor continues to fully support this industry-funded initiative and will be showing our support in the upcoming continuance referendum taking place in August.
Expanding our Specialty Product Line with WynnWood ESLP Boards
This past January we announced our plan to purchase the assets of Wynndel Box and Lumber (WynnWood), located in the Creston Valley of British Columbia.
WynnWood ESLP 1” boards and fascia have established an exceptional reputation for quality, including unmatched fibre, excellent drying and a superior moulded finish.
The WynnWood operation and team brings 100 years of tradition and experience producing specialty products to Canfor. When combined with Canfor’s strong and secure supply of Canfor RED premium quality fibre in the region, the operation will form an integral part of our growing Specialty Products Business.
Following the purchase completion, expected early in the second quarter of this year, we look forward to adding these world-class products to Canfor’s offering and better serving our customers’ needs worldwide.
If you have any questions about WynnWood’s products or any other specialty products, please contact Bob Smith, GM – Specialty Products Sales and Marketing for more information.