Why Things Look Good for Wood

Growing demand for lumber from our southern neighbours will boost Canadian forestry firms suffering from China’s slowdown

Written by Steve Brearton

When demand for lumber collapsed in the U.S. in 2009, a booming Chinese market saved Canadian forestry producers. Today, with Chinese timber imports in decline, it’s an expanding American economy with an increasing appetite for wood that’s expected to boost the sector.

The commodity supercycle may be over, but a low Canadian dollar, the introduction of high-efficiency mills and an expected rebound in American housing starts are reasons for optimism. “It looks like conditions have finally lined up for growth,” says Bill Harris, a portfolio manager who follows the forestry sector at Avenue Investment Management in Toronto.

A decade-long buying spree of U.S. sawmills and wood product manufacturing sites will help such Vancouver-based firms as West Fraser, Canfor and Interfor increase production as needed.


The U.S. housing market is the key driver of lumber demand in North America, and construction is heating up. Between 65% and 75% of North American lumber consumption is related to housing.



Canada’s domestic capacity is limited: Canada’s low dollar and lower production costs offer an advantage compared with American lumber, but our ability to supply wood is limited due to the effect of the pine beetle in B.C., and a reduction in allowable timber cuts in Quebec and the Eastern provinces.


Unable to grow capacity in Canada, Canadian firms like West Fraser Timber Co., Canfor and International Forest Products (Interfor) have bought sawmills and manufacturing plants in the U.S. to increase production.

U.S. sawmills and plants owned by Canadian forestry firms by


These firms—and those that support them—are set up to benefit from higher timber prices. Rates for southern sawtimber and western spruce, pine and fir are expected to increase in the years ahead.


This article is from the May 2016 issue of Canadian Business. Subscribe now!


What other industries are set to benefit from the U.S. recovery? Is your company selling to our southern neighbours? Let us know by commenting below.

Originally appeared on PROFITguide.com

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