Weak buying causes softwood lumber supply cut
By Tom Stundza -- Purchasing, 4/9/2008 2:51:00 PM
Canada’s Canfor Corp. is taking an axe to production because of continued falling demand and poor pricing for softwood lumber in a construction materials market showing no signs of recovery any time soon. The Vancouver-based company, Canada's largest lumber producer, tells the Toronto Globe and Mail it will slash annualized softwood lumber production by about 600 million board feet, which is equivalent to 13% of last year’s production of 4.5-billion board feet.
Pacific Northwest softwood lumber 2x4s sold in the U.S. for an average $270 per thousand board feet in 2007, down from $323 in 2006. The first quarter average was $227 and forecasts have 2008 average around $200. Note: Crows Weekly Market Report
Midweek Update today reports a price of $210.
Economists say lumber producers such as Canfor continue to be battered by weak demand from the key U.S. housing market and from pricing pressure generated by the high Canadian dollar and a 15% export tax. Scotiabank Economics in Toronto, for example, tells clients its Forest Product Price Index has continued to drop “as building material prices have fallen to exceptionally low levels alongside an expected prolonged downturn in U.S. housing starts.”
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