Major Canadian softwood producer Canfor believes the US housing sector’s road to recovery will be a “a long one” as it reported reduced overall first quarter net profits.
Despite recording group net profits of C$32.2m (2010: C$35.5m), a stagnant US housing sector and severe winter weather affected the lumber division, which posted a loss of C$2.3m (2010: C$15.8m profit) from C$328.6m sales.
“We continue to believe that the road to recovery for the US housing market is likely to be a long one, but we are clearly seeing the benefits of the work we have done in developing our Asian markets, particularly China,” said Canfor president and CEO Jim Shepard.
The company’s lumber production in the quarter was up 7%, but shipments of lumber were down 3%, reflecting the major disruption to transport networks caused by the adverse winter conditions.
For offshore markets, lumber demand remained at high levels and continued to support higher prices for narrower dimensions in North America, with the average benchmark western SPF (Spruce/Pine/Fir) 2×4 #2&Btr price up US$27, or 10%, from the previous quarter.
But increases were not replicated across wider dimensions and all higher grades.
Total lumber shipments were 806 million board feet, down 6% on the previous quarter.
Strong lumber demand from Asia increased Canfor’s offshore shipments by 50% compared to a year ago, with China the top destination.
“After the tragic earthquake and tsunami, the Japanese market near-term outlook is more uncertain as the country focuses on clean-up efforts and providing temporary shelter to its citizens,” Canfor said.
“The rebuilding of the devastated areas is projected to lead to increased western SPF lumber demand in time, but this is currently not anticipated to begin for at least 12 months.”
