Looking ahead at LBM
Having lumber orders to fill and not enough inventory on the ground may sound like a dream to LBM dealers right now. But that day may arrive sometime in 2015, according to a forecast by Henry Spelter, an economist with Forest Economic Advisors. Reduced capacity, increased demand from China, the pine beetle infestation in Western Canada and other factors will combine to raise the prices of softwood lumber as supplies tighten.
“The crunch is more likely to come after the [housing] recovery,” said Spelter, who recently retired as an economist for the Forest Products Lab of the USDA Forest Service. While closed mills are pretty typical during a downturn, Spelter pointed out that this time around, “It wasn’t just the smaller mills. Many of the larger mills have also been closed. So we’re [permanently] shrinking capacity.”
Shipments of U.S. softwood lumber are down by 41%, or 4 billion ft., Spelter said. Eastern Canada has reduced its capacity by 5 billion ft. since the housing slowdown, and Western Canada has shrunk its output by 3.5 billion ft.
The situation in British Columbia is complicated by several factors, including U.S. tariffs, which may make China a more attractive market. B.C. mills used to send 70% of their output to the United States, but that number has been reduced to 50%, according to Spelter.
And then there’s the pine beetle. While the “beetle kill” has peaked and loggers are now salvaging what’s left, the shelf life of dead trees remains unknown. With British Columbia accounting for 20% of North American lumber supply, there’s bound to be a ripple effect on pricing by 2015, Spelter said.
Taking the long view, Spelter looked into a future where housing starts are once again at 1.5 million units—with 20% less lumber available. “That’s when the crunch will come,” he said.
WELCOME TO THE SUMMIT
More than 170 people attended the ProDealer Industry Summit in Orlando, Fla., last month. Vendors rubbed elbows with executives from ProBuild, Stock Building Supply, Builders FirstSource, BMC Select, Do it Best, Orgill, LMC and dozens of independent dealers.
The educational program was also a big draw, opening with a housing forecast from National Association of Home Builders economist David Crowe and ending with a coast-to-coast survey of November’s House and Senate races by Michael O’Brien, president and CEO of the National Lumber and Building Material Dealers Association, which cosponsored the event with Home Channel News.
In today’s business climate, there can’t be too much knowledge or networking. In that spirit, the following pages bring you the highlights.
Molpus buys timberland in seven states
Molpus Woodlands Group, a timberlands investment management group, has announced the acquisition of 124,521 acres of pine in the states of Virginia, North Carolina, Georgia, Florida, Alabama, Mississippi and Louisiana. Molpus purchased the tract from Rock Creek Capital, which in turn acquired the acreage from International Paper Co.
Molpus president Dick Molpus said in a prepared statement: "The International Paper properties are high-quality timberlands located in seven southeastern states and represent a diversity of wood baskets with strong product demand. Although these properties were purchased for timberland prices, their proximity to urban areas and major corridors leads us to believe they have promising development, biomass and conservational opportunities."
This acquisition increases Molpus’ total timberland assets under management to more than a billion dollars. Molpus is adding two additional office locations in Florida and North Carolina to its current 14 offices located in eight other states. Headquartered in Jackson, Miss., Molpus is a family-owned company that began in 1905 as a mercantile store in Philadelphia, Miss., before becoming the Molpus Lumber Co.
Centex to launch home-buying webinar
Bloomfield, Mich.-based home builder Centex announced it will host its first ever webinars — named “Open the Door to Homeownership: A Free Webinar Series Featuring Ilyce Glink” — Oct. 6 and 27 aimed at educating first-time home buyers.
Glink is an award winning columnist, television reporter and radio talk show host who delivers tips and tricks on personal finance and real estate, along with general consumer advice.
The first webinar on Oct. 6 will be titled “Rent Vs. Buy” and will discuss the benefits of homeownership. Participants will obtain information to find out if they are ready to purchase a home, the company said.
The second webinar on Oct. 27 will be “New vs. Resale.” Glink will discuss the issues related to short sale and forclosures and how home buyers can take advantage of historically low interest rates, incentives and pricing from new home builders.
“Through these webinars, Centex is empowering its home buyers to make better choices and providing them a solid foundation that gives them a level of comfort and confidence as they take the step into homeownership,” said Deborah Wahl Meyer, senior VP and chief marketing officer for Centex.