Weekly lumber market update and overview

To the astonishment of all, an actual two-tiered market developed this week for lumber buyers and sellers, writes Keta Kosman in Madison’s Lumber Reporter https://madisonsreport.com.

Traders reported that secondary suppliers (reloads, stocking wholesalers, retail yards) were undercutting producer prices, at the sawmills, by $5 mfbm. Perhaps the lumber market will indeed return to more familiar ground as demand recovers and supply becomes more stable.

Field inventories remain weak compared to 2004 levels, but there is obviously enough wood available through the supply chain to provide negotiating room for buyers and sellers. Prices on most lumber and panel commodities improved through July and this week sawmills reported order files out as far as October on some items.

The return of the softwood lumber export tax on Canadian wood exported into the US this week had little effect on the market, except for the need of Canadian traders to put in extra work with their calculators. Players are waiting with baited breath to find out if the tax will be reduced, or eliminated, for September, as strengthening prices seem to indicate.

The August long weekend in Canada usually heralds a slow-down for the lumber business, and this year was no different. As the week drew to a close players were away from the office with increasing frequency, particularly in Quebec where the two-week construction/manufacturing holiday is in full swing. Despite the limited office staff, enough lumber was sold to nudge prices on some important items.



Benchmark WSPF KD 2x4 #2&Btr remained essentially flat, losing only $1 on last week's gain to close the week at US$324 mfbm. This is a $26, or 8.1 per cent, improvement over the same time last year, and a $70, or 21 per cent, improvement over July 2011.

Cooler temperatures and sopping rain on the west coast brought great relief to recently growing wildfire concerns in British Columbia, Washington State, and Oregon. Operators were pleased to note that the requisite seasonal fire bans were just about to come into effect when the rains came. A lack of restriction on logging for August and September will make planning much easier for North America's timber harvesters and lumber producers.

Forest companies reporting financial results this week were International Forest Products Ltd. (TSX: T.IFP.A, Stock Forum), Tembec Inc. (TSX: T.TMB, Stock Forum), CanWel Building Materials Group Ltd. (TSX: T.CWX, Stock Forum), and Western Forest Products Inc. (TSX: T.WEF, Stock Forum). Resolute Forest Products Ltd. (TSX: T.RFP, Stock Forum) (NYSE: RFP, Stock Forum) released preliminary results Thursday.

Resolute reported a net loss of $43 million in 2Q 2013 on sales of $1.1 billion, compared with a net loss of $17 million on sales of $1.2 billion one year ago. Western Forest Products Wednesday reported 2Q 2013 net income of $35.5 million on sales of $262.3 million, compared to a net income of $10.4 million on sales of $251.4 in 2Q last year.

Tembec, reporting its 3Q, said Thursday its consolidated sales were $399 million, as compared to $415 million in the same quarter a year ago. Tembec generated a net loss of $4 million in the June 2013 quarter, compared to a net loss of $5 million in the June 2012 quarter.

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Keta Kosman
Publisher
Madison's Lumber Reporter
604 984-6838
www.madisonsreport.com