By Stephen Nakrosis
West Fraser Timber expects several trends that have served to support medium- and longer-term new home construction demand in North America will continue.
On the North American outlook:
The company said the most significant uses for its North American lumber, oriented strand board and engineered wood panel products are residential construction, repair and remodelling and industrial applications. Over the medium term, West Fraser said, an improvement in housing affordability is expected to drive new home construction and repair and renovation spending, which will support lumber, plywood and OSB demand.
Factors including a stabilization of interest rates and inflation, along with many people entering the home buying stage, will benefit home construction and repair, the company said.
Longer term, "growing market penetration of mass timber in industrial and commercial applications is also expected to become a more significant source of demand growth for wood building products in North America," West Fraser said.
Demand for new home construction and wood building products may decline near term if the broader economy and employment slow or if consumer sentiment and housing affordability are hurt by interest-rate trends, the company said.
On the European outlook:
West Fraser continues to experience near-term softness for certain products in Europe and the U.K. but said it is experiencing slightly better demand for OSB products early in 2024. "We continue to expect demand for our European products will grow over the longer term as use of OSB as an alternative to plywood grows," West Fraser said.
Aging housing stock supports long-term repair and renovation spending and additional demand for wood building products, the company said.
In the near term, risks include interest rates, geopolitical developments and the lagged impact of recent inflationary pressures, which may cause further temporary slowing of demand for panel products in the U.K. and Europe, the company said.
On its operations:
West Fraser continues to expect total lumber shipments in 2024 will be largely similar to last year's levels.
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
April 23, 2024 18:37 ET (22:37 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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