SEATTLE (Scrap Monster): The latest research report by RBC analyst Paul Quinn foresees bullish lumber markets during the current year.
RBC noted that lumber companies faced a worst year in 2019, with most of them reporting huge profit declines. However, a number of positive developments are likely to deliver better year in 2020.
According to the report, the production curtailments due to sawmill closures coupled with recovery in U.S. housing starts will provide big boost to lumber industry. The province of B.C has witnessed rampant sawmill closures during recent times, accounting for nearly 18% of the province’s total production capacity. This could help to match the North American supply with the actual market demand. Further, it may also lead to improved lumber prices going forward.
ALSO READ: FEA-Canada Forecasts 1.6% Surge in Global Lumber Output
The report predicts 5% decline in lumber supply when matched with the previous year. Also, U.S. housing starts are projected to increase by 2.5% to approximately 1.3 million units this year, primarily driven by growth in single-family housing. The anticipated boost in construction of taller wooden buildings is expected to lead to increased lumber demand in 2020, RBC report said.
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