The trend, analysts say, could encourage North American timber companies to look for new customers in Europe.
The International Report’s 2007 softwood lumber forecast said consumption in North America is expected to drop from 75.8 billion board feet in 2005 to 72.8 billion board feet in 2006 and by a similar 4% to 69.5 billion board feet during 2007.
US housing starts had declined 24% over a two-year period, the report said, and were expected to drop this year by a further 11%. The benchmark W-SPF average price, US$353 per million board feet in 2005, is expected to be about US$296 for 2006 and is headed further down to US$275 in 2007.
“Lumber producers need to realise that we are only about half way through this housing market cycle correction and a second wave of lower lumber demand from the predicted reduction in housing starts is still to come in 2007,” the report said.
“The price spread between Europe and the US has widened so much in the second half of 2006 that it is now feasible for North Americans to re-enter the European market to achieve similar or even higher returns than are currently available in the US market,” said Russell Taylor, of International Report publisher International Wood Markets Group Inc.
