VANCOUVER, BC — West Fraser Timber reported Q3, 2024 results. Third quarter sales were $1.437 billion, compared to $1.705 billion in the second quarter of 2024. Third quarter earnings were $(83) million, compared to $105 million in the second quarter of 2024. Third quarter Adjusted EBITDA was $62 million compared to $272 million in the second quarter of 2024. Segment highlights include: Lumber Adjusted EBITDA of $(62) million, including $32 million of export duty expense attributable to the finalization of AR5; North America Engineered Wood Products Adjusted EBITDA of $121 million; Pulp & Paper Adjusted EBITDA of $2 million; and Europe Engineered Wood Products Adjusted EBITDA of $1 million. …Sean McLaren, West Fraser’s President and CEO, said “North American OSB, plywood and other engineered wood products continued to experience healthy demand and the Lumber segment saw unexpected improvement in SPF demand, while SYP markets remained challenging, in part reflecting ongoing softness in repair and remodelling markets.”
MONTREAL — Canadian National Railway is reporting that profits nudged down in its latest quarter, when wildfires and labour disruptions took a toll on operations. The country’s largest railway says net income slipped by two per cent to $1.09 billion in the three months ended Sept. 30, down from $1.11 billion in the same period a year earlier. The Montreal-based company says third-quarter revenues rose three per cent to $4.11 billion from $3.99 billion the year before. …CEO Tracy Robinson says CN managed to recover quickly from problems posed by forest fires and “prolonged labour issues” during the quarter. The hurdles included a grain workers strike in B.C. last month and a countrywide lockout at CN in August that snarled some shipments for weeks.
Prices of products manufactured in Canada, as measured by the Industrial Product Price Index (
Steady sales and tightening supplies drove framing lumber prices higher in many species. Traders balanced news of rising mortgage interest rates with growing positive sentiment among single-family homebuilders. The Random Lengths Framing Lumber Composite Price notched its third consecutive weekly increase, rising $8 to $411. That is the composite’s highest level since April. Western S-P-F buyers padded light field inventories and procured occasional insurance loads amid a perception that supplies were less available. …In the South, upward price momentum eased as the week progressed. Sales moderated to a steady, but less fervent pace compared to recent weeks. Hurricane Milton’s aftermath generated a modest increase in demand for items needed to rebuild fences and make other repairs in the storm’s peripheral path.
OTTAWA — Forecasters expect the Bank of Canada to speed up the pace of interest rate cuts and lower its policy rate by half a percentage point this week. The central bank’s interest rate announcement on Wednesday comes after Statistics Canada reported the annual inflation rate in September tumbled to 1.6% — below the Bank of Canada’s two per cent inflation target. Nathan Janzen, an assistant chief economist at RBC, said the latest consumer price index report reinforced his expectation for a supersized rate cut. “You have an economy that’s probably performing worse than necessary to get inflation under control and still interest rates (are) at restrictive territory,” Janzen said, adding that the central bank needs to lower interest rates to a level that doesn’t hinder economic growth. …The Bank of Canada has lowered its key interest rate three times so far, bringing it down to 4.25%.
NEW YORK, NY — Mercer International reported its preliminary financial results for the third quarter of 2024. For the third quarter ending September 30th, 2024, Mercer reported revenues of $502.1 million, up from $499.4 million in the second quarter of 2024, and a net loss of $17.6 million, compared to a net loss of $67.6 million in the second quarter. …Mr. Juan Carlos Bueno, Chief Executive Officer, stated: “We continued to see strength in softwood pulp markets with relatively flat fiber costs in the third quarter of 2024. However, our operating results for the quarter were constrained due to the occurrence of several unrelated events that impacted pulp production, including the previously announced unscheduled downtime of 23 days (approximately 35,500 ADMTs) at our Mercer Peace River mill, a slower than normal maintenance start-up and other production upsets at our Stendal Mill.
A looming unknown is the potential impact from the European Union’s deforestation regulation (EUDR). If this policy requirement is implemented as currently planned on December 30, 2024, it will cause total trade chaos in world markets. Simply put, many countries will not be ready to meet the stringent requirements of the policy. While the markets may be lacklustre for the rest of 2024, the EUDR could quickly change it all with the potential of huge dislocations in global trade flows. …A quick pro-forma analysis on the lumber revenue versus the costs of lumber production of four major producing regions in North America plus Central Europe yields a very clear story. …The results are essentially negative in all regions of North America given their higher costs. …Permanent mill closures at high-cost mills have also been occurring in BC, the US Pacific Northwest regions and the US South. 
The softwood lumber market’s reaction to last week’s encouraging economic news remained moderate at best. Demand was steady in most species, but news of reduced interest rates fell far short of jump-starting sales. As a whole, prices wavered and the Random Lengths Framing Lumber Composite Price dropped $1 for the second consecutive week. Western S-P-F sales were unspectacular. …Lumber futures surged early in the week, but the board gave back on Wednesday. The front month continued to carry a premium to the physical market, affording some traders basis opportunities. Hurricane Helene’s approach through the Gulf of Mexico interrupted an otherwise steady Southern Pine market. Buyers covered mostly immediate needs in early trading and scaled back new orders as the week progressed. …A perception that recent curtailments across the South had aligned supplies more closely with demand infused a firmer tone into the market.
With lower mortgage rates expected, will we see a hotter housing market increasing demand for lumber and lumber prices? …Although many mills continued to run during previous tough times to drive high-cost producers out of the market, mills are taking downtime more quickly now to support prices. …After a slowdown in homebuilding activity over the previous months, 
The Canadian Wood Council (CWC) and Woodsure (A division of Axis Insurance Managers Inc.) announced a new partnership between their WoodWorks and Woodsure programs respectively. This strategic collaboration is expected to help support the increased adoption of wood construction in Canada. The positive influences of design innovation, advanced materials, new building codes, and the evolving priorities of society are driving change in the construction sector; in particular, these influences are driving the expanded use of advanced wood construction… However, as with the adoption of any new technology, perceived unknowns can create barriers that need to be to overcome. One such barrier is access to insurance for this new class of technologically advanced wood buildings.
It’s here-we-go-again time in Canada-US trade relations on softwood lumber. And the Canadian government this month has filed legal challenges to the decision by the Department of Commerce to increase the duty it charges on softwood lumber imports from Canada to 14.54% from 8.05%. …The decision has coincided with depressed market conditions… which have fueled mill curtailments and permanent closures across Canada as well as the United States. Adding to the negative landscape has been the impact of the most destructive wildfires in Canadian forest history in 2023. …Canada is the top global exporter of softwood lumber – valued at C$13.7 billion in 2022, with the US market alone accounting for about two-thirds of this total. …Although some analysts see the fundamentals underlying softwood lumber’s end-use markets remaining strong, the trends of shipments in the past few years have reflected an industry under severe stress. 
WASHINGTON — Inflation in the United States dropped last month to its lowest point since it first began surging more than three years ago, adding to a spate of encouraging economic news in the closing weeks of the presidential race. Consumer prices rose just 2.4% in September from a year earlier, down from 2.5% in August, and the smallest annual rise since February 2021. Measured from month to month, prices increased 0.2% from August to September, the Labor Department reported Thursday, the same as in the previous month. But excluding volatile food and energy costs, “core” prices, a gauge of underlying inflation, remained elevated in September. Core prices in September were up 3.3% from a year earlier and 0.3% from August. …The improving inflation picture follows a 
In September, mortgage rates maintained their downward trajectory, returning to levels last seen two years ago. According to Freddie Mac, the average rate for a 30-year fixed-rate mortgage fell to 6.18%, a decline of 32 basis points (bps) from August. The 15-year fixed-rate mortgage saw an even steeper decline, decreasing by 42 bps from August to 5.26%. Additionally, the 10-year Treasury rate declined by 23 bps, falling from 3.98% in August to 3.75%. According to the NAHB forecast, the 30-year mortgage rate is expected to near 6% on a sustained basis by the end of 2024, with a further decline to just below 6% during 2025. NAHB also predicts furthering easing by the Federal Reserve before the end of 2024.
The US economy grew at a 3% annualized pace in the second quarter, a faster rate than Wall Street had expected. The Bureau of Economic Analysis’s third estimate of second quarter US gross domestic product (GDP) was unchanged from the second estimate which had shown 3% annualized growth. Economists had estimated the reading to show annualized growth of 2.9%. The third estimate for second quarter GDP confirms that economic growth was higher than the 1.4% annualized growth seen in the first quarter. “The revisions only strengthen our conviction that the US economy will continue to expand at a decent pace over the coming year, which suggests labor market conditions are unlikely to deteriorate markedly from here,” said Oxford Economics deputy chief economist Michael Pearce. Separately, data from the US Labor Department released Thursday showed 218,000 unemployment claims were filed in the week ending Sept. 21, below Wall Street’s expectations for 223,000.
Home prices remain elevated but price growth continues to decelerate, according to the S&P CoreLogic Case-Shiller Home Price Index (HPI). The HPI (seasonally adjusted) reached its 14th monthly consecutive record high in July 2024. The index increased at a seasonally adjusted annual rate of 2.15%, down slightly from a revised June rate of 2.19%. This rate has slowed over the past six months, from a high of 6.53% in February 2024. The index has not seen an outright decrease since January of 2023 (nineteen months). Separately, the House Price Index released by the Federal Housing Finance Agency (FHFA; SA) posted its sixth monthly consecutive record high, after having decreased slightly in January of this year. The FHFA HPI recorded a 1.57% increase in July, upward from a revised 0.03% rate in June.
The SLB published its 
Southern Pine dimension mills have attempted to keep supplies more in line with sluggish lumber demand in recent months, but perceptions remain mixed whether it has ultimately been effective in tempering downward price pressure. Several mills reportedly curtailed production through the summer months without making public announcements to indicate cutbacks. Most of the measures were modest, often limited in scope to simply reducing shifts, according to sources. …Production curtailments by Western S-P-F mills have also contributed to rebalancing supplies and demand, as buyers in northern-tier markets who purchase both species have encountered dwindling availability. However, some SYP traders are unsure whether the quiet production cutbacks have had any true effect on the overall market. New mills in some producing zones came online in early summer and ramped up output.
The Forest Sector Outlook – 2024-Q2 report features global economic and forests/industry/market updates from all continents around the world. The report includes regional reviews on local market and industry developments in wood products and timberlands for each region. This 13-page report can be found on the RUSS TAYLOR GLOBAL 
