Canfor Corporation reported on Oct. 23 net income attributable to shareholders (“shareholder net income”) of $22.2 million for the third quarter of 2012, compared to $4.5 million for the second quarter of 2012 and a shareholder net loss of $21.6 million for the third quarter of 2011.
Commenting on the third quarter performance, Canfor’s president and CEO, Don Kayne, said, “The improvement in lumber sales realizations reflected a steady increase in construction activity in North America and continued solid offshore demand for Western SPF lumber products.”
Lumber markets improved moderately in the third quarter, reflecting further stabilization of underlying demand in both North American and offshore markets.
The average North American benchmark Western Spruce/Pine/Fir (“SPF”) 2×4 #2 and better price rose two per cent to US$300 per Mfbm, with slightly higher increases seen for most wider SPF products. The export tax on Canadian shipments to the U.S. averaged eight per cent in the third quarter, down from a 13 per cent average in the previous quarter.
Under the Softwood Lumber Agreement (SLA) implemented by Canada and the U.S. in 2006, Canadian softwood lumber exporters pay an export tax on lumber shipped to the U.S. when the price of lumber is at or below US$355 per Mfbm.
Looking forward, U.S. lumber consumption is projected to slow in the fourth quarter of 2012 with traditionally lower seasonal homebuilding activity. The Canadian housing market is forecast to follow a similar trend, with demand projected to level off towards the end of the year. U.S. home inventories are projected to remain relatively low, aided by low mortgage rates and gradual appreciation in home prices. Shipments to the U.S. are projected to taper off as export taxes increase from five per cent in October to 10 per cent in November, but offshore lumber shipments to China, Japan and Korea are anticipated to offset any slowdown in North American shipments.