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Emerging Trends
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Western Lumber Markets To Remain Slow |
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It will take a while longer for the U.S. lumber market to get on the road to recovery, according to a new forecast issued by the Western Wood Products Association.
Following four straight years of record consumption, demand for lumber declined 6% in 2006 and is forecast to fall another 7.5% to 55.97 billion bd. ft. this year. Looking to 2008, WWPA predicts overall demand will slip 1.8% before rebounding the following year.
A slower American economy, marked by declines in mortgage banking, real estate and construction, continues to impact lumber markets. These developments have reduced home construction, with housing starts falling almost 13% in 2006. WWPA is forecasting another decline in housing for this year, with starts expected to decrease 16% to 1.5 million before rising modestly to 1.56 million in 2008.
Western mills have cut back production in the face of lower demand. Western lumber output, which fell 7.5% in 2006, should decline again this year to 16.6 billion bd. ft., down 7%. In 2008, western output is expected to be off a modest 1.2% to 16.4 billion bd. ft.
Mills in the coast areas of Oregon and Washington will fare better than other western mills. Coast production, off 6.3% in 2006, is forecast to decline 5.8% to 10.2 billion bd. ft. this year. For 2008, coast mill production should be close to 2007 volumes.
Inland region mills, located in eastern Oregon, eastern Washington and other western states, are reducing production at a faster pace. After an 8.5% drop in 2006, Inland mills will fall almost 9% to 5.6 billion bd. ft. this year. Next year, WWPA is forecasting Inland production to decline to 5.5 billion bd. ft.
Production in the California redwood region will experience the steepest declines, with volumes totaling just 800 million bd. ft. by 2008-almost 25% lower than 2005 totals.
Southern pine production surpassed western output for the first time in 2006 and the gap is expected to widen this year. Production in the South will total 17.5 billion bd. ft. this year and dip to 17.3 billion bd. ft. next year.
Canadian lumber imports are expected to drop below 20 billion bd. ft. for the first time in three years, decreasing to 18.8 billion bd. ft. this year and slipping a modest 1.4% in 2008 to 18.5 billion bd. ft.
European mills, hampered by low prices and exchange rate differences, will continue to pull out of the U.S. market, according to the WWPA forecast. Shipments from Europe fell 18.8% last year and should drop another 24% in 2007 to 1.2 billion bd. ft. Next year, European imports are forecast at just 1.1 billion bd. ft.
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