Softwood comes lumbering back

The U.S. housing collapse saw to it that the forest industry missed out on recent price spikes affecting other commodities. But that is about to change, according to some analysts' reports. Vancouver–based consulting firm International Wood Markets is predicting standard–dimension lumber will soar from a low of US$180 per thousand board feet in 2009 to $500–plus by 2013 or 2014, the result of a housing recovery in the U.S. coupled with rising demand in China and supply constraints brought on by the mountain pine beetle infestation in British Columbia. What's more, it could spell an end to the decades–old softwood lumber dispute with the U.S.

Canada's sleeping giant of a forest industry is already showing signs of awakening, especially for B.C. operators with their foot in the door of the Chinese market. While exports to the U.S. recovered somewhat to nine billion board feet in 2010 (from a low of 7.5 billion a year earlier), exports to China jumped 75% to a projected 2.8 billion board feet worth $660 million.

That's just a hint of how big a market China could become, B.C. Forests Minister Pat Bell enthused at a speech following a trip to China last fall. There were about 600,000 housing starts in the U.S. last year; China is building 10 times that many over the next three years under its affordable housing initiative alone, he noted.