Of the Top Ten Questions for 2014 posed at Harderblog one year ago, some may have been satisfactorily answered for us; others, not so much.
1) Is there a real shortage of fibre supply looming?
B.C.’s Chief Forester Dave Peterson recently confirmed there will be less timber. “There’s no doubt we’re coming closer and closer to the point where the cuts will be reduced,” said Dave. Cuts are predicated by area, region, species, site conditions, and is specific to sawmills.. seemingly making any generalization regarding a fibre shortage not applicable. West Fraser CEO Ted Seraphim has publicly stated “The industry is smaller today and it’s going to be smaller tomorrow in British Columbia.”
2) Is B.C. doing enough to restore/replant forest that was degraded/destroyed by the Mountain Pine Beetle?
Earlier this week we turned to John Betts, Executive Director of the Western Silvicultural Contractors’ Association. “One of the best answers to that question comes from an internal Wildfire Management Branch discussion paper released recently describing the consequences of climate change and the current state of our forests,” says John. “We can expect widespread wildfires causing environmental losses and huge costs to government and the B.C. economy. Runaway wildfire years will not only upset provincial finances but cause major setbacks to landscape in terms of bio-diversity, abundance and services that influence the quality of air and water and life in general. The remedy to these consequences lies in restoring the landscape. But those mitigative restoration and reforestation strategies are not widespread in proportion to the scale of the threat. Nor are they consistently or adequately funded. I think we could do more to restore/replant forests. In fact we probably will have to in the future.”
3) Is the northern pipeline a relevant issue of interest to forestry in this province?
The real impact is still unknown. It would seem since many aspects of the northern pipeline are still up for negotiation, involving Federal politics, First Nations negotiations.. many questions still unanswered.
4) Will Canadian Softwood lumber shipments to the United States be ‘duty-free’ for all twelve months in 2014?
Yes. In fact January 2015 will mark the 15th consecutive month that the “Prevailing Monthly Price” has remained above the $355/M tax trigger. The current 2006 Softwood Lumber Agreement expires October 12, 2015.
5) Is there a housing bubble developing in Canada?
CBC reports here “Both federal Finance Minister Joe Oliver and the governor of the Bank of Canada, Stephen Poloz, have acknowledged potential dangers. Poloz worried publicly last week that house prices could be overvalued. But when questioned in New York he said a 30% overvaluation was not a bubble.” While the normalization of interest rates is expected to have an impact, some still anticipate a ‘soft landing’. Meanwhile, vested interests peddle their skewed opinions to suit their own point of view.
6) Will U.S. housing starts reach 1.25 million in 2014?
No. November housing starts data indicates an annualized pace of 1.028 million for 2014. The monthly average through November is 991,000 (CIBC). Year-over-year, single family starts are up 4.4% and multifamily starts are up 16.6% Severe winter weather saw housing starts down YOY in Q1 – but starts picked up in the 2nd half.
7) What does the emerging Super Cycle mean to lumber distributors in North America?
‘Super Cycle’ may still hold relevance in some pedalling circles, but as far as being part of B.C.’s forestry lexicon, it appears to have faded like lofty oil.
8) Who benefits from lumber and log exports to China?
The largest producers seem to be benefiting most from export growth. North American producers gain price leverage in offshore markets, enhancing the bottom line.
9) Is the gap likely to narrow between Luongo’s income in 2014 and the average lumber trader’s income?
No. Luongo is still being paid big bucks to play in front of Florida Panthers home crowds equivalent in numbers to most medium-sized office wholesale staff.
10) Will West Fraser and Canfor ship enough wood to China in 2014 to renovate the Great Wall?
Through October, B.C. exports of softwood lumber to China were down 2.6% year-over-year (CIBC). In the month of October, B.C. exports to China were down 17% YOY (CIBC). As any homeowner knows, maintenance tends to be an ongoing process. And so it is with that big fence in China. In the face of China’s fibre deficit, the need for wood from “The Billion Board Foot Club” will be ongoing.
What do you think? Where do you agree/disagree? I welcome your input..