2014 Cofi Convention
North American Lumber Markets
April 3, 2014
Kelowna, British Columbia
Contents
1. West Fraser
2. US Housing Starts
3. Fiber and Labour Constraints
4. Transportation
5. Midrise and Tall Wood Buildings
6. Summary
2
West Fraser
LUMBER
PANELS
PULP & PAPER
27 mills
6 mills
5 mills
Plywood: 830 MMsf3/8”
MDF:
300 MMsf3/4”
LVL:
3.2 MMcf
NBSK:
590 Mtonnes
BCTMP:
650 Mtonnes
Newsprint: 135 Mtonnes
SPF 3.8 Bfbm
SYP 2.0 Bfbm
Total 5.8 Bfbm
• North America’s largest lumber producer
• Largest plywood producer in Canada
• Third largest pulp producer in Canada
3
Geographic Diversification
28. Mansfield
28
4
U.S. Housing
Pent Up Housing Demand (conventional + mobile)
2.25
2.00
Million Units
1.75
1.50
1.25
1.00
0.75
Production
Underlying Demand
0.50
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
Significant pent up demand bodes well for long-term recovery
5
Source: FEA, Q4 2013
U.S. Housing
U.S. Housing Forecast (2014 & 2015)
Single & Multi Family
1,600
1,400
1,200
1,000
'000s
800
600
400
200
0
Mortgage
Bankers
Wells
Fargo
NAHB
FEA
APA
RISI
Mesirow
Financial
Royal
Bank
Average
6
Source: APA, January 2014
Mortgage Foreclosures in “Sand States”
Have Plunged
Percentage
3
2
Mortgage Foreclosures
Started: California (NSA,
%)
Mortgage Foreclosures
Started: Arizona (NSA, %)
1
Mortgage Foreclosures
Started: Florida (NSA, %)
Q1-1996
Q1-1997
Q1-1998
Q1-1999
Q1-2000
Q1-2001
Q1-2002
Q1-2003
Q1-2004
Q1-2005
Q1-2006
Q1-2007
Q1-2008
Q1-2009
Q1-2010
Q1-2011
Q1-2012
Q1-2013
0
7
Source: FEA
Canadian Fibre Supply
80
Annual Allowable Cut
Forecast
70
60
Million (M3)
50
40
30
20
10
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
BC Interior
Quebec
Ontario
8
Source: FEA, Q4 2013
Canadian Shipments to China
4,000
Equivalent to 300,000 housing starts *
3,500
3,000
MMfbm
2,500
2,000
1,500
1,000
500
0
2006
2007
2008
2009
2010
2011
2012
2013
* Based on consumption of 11.5 Mfbm per U.S. housing start (average mix of single and multi family)
9
Source: Council of Forest Industries, December 2013
Builders Are Facing Shortages of Labor and
Buildable Lots
Percent of Builders Reporting Problems:
65.0%
55.0%
53.0%
46.0%
34.0%
30.0%
21.0%
13.0%
2011
Cost/Labor Availability
2012
2013
2014
Cost/Land Availability
10
Source: FEA, NAHB HMI Survey, Jan 2014
Changing Nature of Transportation
11
11
Earth Sciences Building
University of British Columbia, Vancouver
12
Mid-Rise in B.C.
Projects
Buildings
25
45
Completed
15
22
Under Construction
87
137
Preparing plans, working drawing,
permitting
27
43
Contemplated, preliminary design
154
247
Total projects active and completed
Ontario
• Networking with Ministry
of Housing
• Championed by BILD
and Toronto HBA
• Competing products –
negative media campaign
Status
Quebec
• Wood Charter
• RBQ – Mid-Rise Guide
available
• Fast Track National Code
Changes?
Source: Canadian Wood Council
13
CWC / FPInnovations / NRC
Mid-rise Fire & Acoustic Research
14
Take Home Points
• Demand will improve more slowly than previously
forecast.
• Labour and capital constraints will likely slow the
housing recovery.
• Fibre supply will tighten as recovery continues
• Transportation is a major challenge
• Industry needs to collectively address trucking and rail
issues
• Real recovery is coming but will take time
15

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