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Canada:Housing Starts Hits Ten-Year Peak
¡¾Jan.17, 2002¡¿

Canadian Housing Starts Hits Ten-Year Peak

MARKET UPDATE

Canadian housing starts hit a ten-year peak in 2001! Canada Mortgage and Housing Corporation reported starts at 163,000 units, up 4.5% over 2000. This was a superb performance by the homebuilding industry, considering that the economy is in recession. And 2002 could be just as good, since demand for housing continues unabated. Canada's housing starts are strong for the following reasons:

Low unsold inventories of both single- and multiple-family units;
Forty-year lows in mortgage rates; and
Annual immigration of 250,000 new residents, plus natural population growth.
The Canadian lumber market is also strong, consuming an estimated 7.2 billion bf last year.

PRODUCT UPDATE

Current Market

All species have firmed in price, with the exception of E-SPF, which fell $5-$10 from last week's levels. Weather conditions in the consuming regions are the key: if conditions remain moderate, price levels could move even higher. Traders anxiously await the counter-proposal from the U.S. Coalition to Canadian offers to settle the Canada-U.S. trade dispute.

Eastern SPF

Most producers are back in full operation after holiday curtailments. Consequently, sales managers were under pressure to build order files and prices dropped from last week's levels to $315 (Great Lakes) for 2x4 and $300 or less for studs. Weather conditions in the eastern regions of the U.S. moderated and sales activity was reported as fair.

Western SPF

A strong close in the January futures contract on Tuesday provided some strength for the cash market. Std & btr 2x4 hovered around $228 and studs at $234. Most major producers are now producing a #2 & btr grade to satisfy the rising demand for this quality from DIY home centres. Premiums have shrunk to around $10 over std & btr grades.

Southern Pine

SYP continued to gain momentum as wholesalers, retailers and treaters entered the market to start their spring inventory purchases. Std & btr 2x4 rose to $310 (West) or higher and 2x12 was hard to find at $420. This rally is the strongest in almost a year and shows signs of continuing.

Inland Hem-Fir

Limited production is keeping supplies tight: std & btr 2x4 was firm at $292 (Spokane) and wide widths were in a range of $310-$345. Moderate weather conditions in the U.S. Midwest stimulated demand.

Douglas Fir Green

California buyers stepped into the market to replenish inventories and std & btr 2x4 shot up to $290 (Portland) or more. Northeast buyers brushed aside their cautious attitudes and also stepped in, bolstered by mild weather in the Northeast and increased construction activity.

Western Red Cedar

Demand was strong for all cedar products, particularly fencing, as producers took advantage of the suspension of the 19.3% CVD to resume operations.