By Stephen Nakrosis
West Fraser Timber expects trends that have served as key drivers of demand for new home construction in recent years will continue.
On Wood Product Demand:
North American oriented strand board, plywood and other engineered wood products continued to experience healthy demand in the third quarter, President and Chief Executive Officer Sean McLaren said. In addition, and the lumber segment saw unexpected improvement in spruce, pine and fir demand. However, southern yellow pine markets remained challenging, in part reflecting continuing softness in repair and remodeling markets, he said.
On North America Demand:
While demand for home construction and wood products may decline in the near term, home buying looks to be supported in the medium term by the stabilization of inflation and interest rates, the company said. It noted that a large part of the U.S. population is entering the typical stage where they buy homes. Unemployment remains low, and the U.S. central bank's most recent rate hiking cycle is now generally believed to be over, the company said.
Aging U.S. housing stock will also drive demand for products used in new home construction, repair and renovation projects, West Fraser said.
The company said the most significant uses for its North American lumber, OSB and engineered wood panel products are residential construction, repair and remodeling, along with industrial applications.
Longer term, increased market penetration of mass timber in industrial and commercial applications is expected to become a more significant source of demand growth for wood building products in North America.
On Europe and the U.K. Demand:
In Europe and the U.K., the company said it has to experienced slightly better demand for its OSB products, but relatively softer demand for medium-density fiberboard and particleboard panel products. Demand for European products is expected to grow in the long term as use of OSB as an alternative to plywood grows, West Fraser said. The continent's aging housing stock supports long-term repair and renovation spending and demand for the company's wood building products.
On Geopolitics and Inflation:
"Ongoing geopolitical developments and the lagged impact of prior inflationary pressures may adversely impact near-term demand for our panel products in the U.K. and Europe."
Write to Stephen Nakrosis at stephen.nakrosis@wsj.com
(END) Dow Jones Newswires
October 23, 2024 18:35 ET (22:35 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.
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