Canada and U.S. Lumber Producers for 2011 Show Modest Growth and Ongoing Consolidation

March 26th, 2012 by DWM Magazine

The International Wood Markets Group reported that the annual survey of the top 20 Canadian and U.S. lumber producers shows that West Fraser Timber was North America’s largest softwood lumber producer in 2011 with 4.91 billion board feet. The company was also Canada’s largest producer, while Weyerhaeuser was the largest U.S. lumber producer in 2011 and North America’s second largest lumber producer with 3.56 billion board foot (bf).

“With North American lumber production in 2011 increasing a modest 5.2 percent over 2010, the Wood Markets survey provides further evidence that the fledgling lumber market recovery that started in 2010 has continued to build on itself in 2011, albeit slowly,” says Peter Butzelaar, Wood Markets vice president.

According to the report, for the second consecutive year the top 20 Canadian companies increased their market share of total Canadian lumber production, rising from 73.7 percent in 2010 to 76.8 percent in 2011. The order of the top five lumber producers in Canada was unchanged from 2010: West Fraser, Canfor, Tolko, Resolute FP (the new name for Abitibi-Bowater after re-emerging from creditor protection) and Tembec. These five firms produced a total of 11.0 billion bf (49 percent of Canadian lumber output) versus 10.3 billion bf (47.1 percent) in 2010.

Similar to Canada, there was no major change from 2010 in the order of the five largest producing U.S. companies: Weyerhaeuser, Sierra Pacific, West Fraser (U.S.), Georgia-Pacific and Hampton Affiliates. The output of the top 20 U.S. companies rose from 14.0 billion bf to 14.8 billion bf (+5.5 percent). Unlike in Canada, the growth rate for the top 20 U.S. lumber producers was at a slower rate than the average for all U.S. companies. While falling behind the average growth rate of the industry, the top 20 U.S. companies also saw their share of total U.S. production slip to 55.3 percent versus 56.4 percent in 2010.

Total Canadian softwood lumber output rose from 21.9 billion bf in 2010 to 22.5 billion bf in 2011 (+2.5 percent), while U.S. production grew from 24.9 billion bf to 26.9 billion bf (+7.6 percent).

“Although U.S. housing starts were less than stellar at 607,000 units in 2011 (up from 587,000 in 2010), North American lumber consumption showed modest growth of 640 million bf (+1.5 percent), coming in at 43.2 billion bf for the year,” says Russ Taylor, Wood Markets president. “As in 2010, offshore Asian demand (mainly Chinese) was the biggest factor driving the industry growth.”

British Columbia producers continued to benefit from China’s expanding demand for North American lumber in 2011. Canadian producers (almost all from B.C.) increased their softwood lumber shipments to China to 5.0 billion bf nominal. In just two years, Canada has increased its shipments to China by 196 percent, according to the report, to the point where Canada’s exports to China are second to only to those of the United States.

In comparison, U.S. firms exported much lower volumes to China in 20011, or 660 million bf nominal; this was still an increase of 190 percent over 2010 levels, according to the report, adding that the increase moved China ahead of Canada as the United States’ largest export market for softwood lumber in 2011.

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