from Conifex earnings Outlook
We believe SPF supplies are contracting at the same time demand is increasing, and lumber prices will move higher.
The BC Ministry of Forests discloses that the log harvest in the interior region of BC, which totalled 47 million cubic metres in 2018, plummeted to 27 million cubic metres in 2023. The Ministry also discloses in the most recent provincial budget that the interior region of BC log harvest is forecast to come in at 26 million cubic metres annually in the current and following three years. This harvest contraction will reduce SPF lumber production from the interior region of BC by 4.8 or 4.9 billion board feet annually. This supply contraction is huge – it is equivalent to approximately 8% of North American softwood lumber consumption and sufficient to offset the incremental lumber supply from more than 20 new industrial scale sawmills brought on stream in the US South over the past five years. With mounting evidence that US housing starts will increase in 2024 and 2025, these supply/demand dynamics support our expectations for rising prices for SPF lumber.