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From The Editor

Thursday, November 20th

Recovery...in 2011?

How long can your sawmill hang on? If the seasoned market watcher Russell Taylor is right, it had better be at least two more years. It is generally agreed now that 2009 will not see the beginning of the recovery in lumber demand many had hoped for. Yet while some are still expecting things to start turning around very late in 2009, Taylor suggests in the November issue of Wood Markets that we will only be seeing the bottom by then as far as housing starts go. He forecasts another 9 percent drop in US lumber demand next year as a result. We'll see signs of a very modest recovery only in 2010 at the earliest.

"We also forecast that the long-term sustainable level of 1.6 to 1.7 million housing starts will not be reached for at least another four years (2012)," he predicts. "It appears it will now take longer to recover from the current housing market and economic collapse than anyone wants to acknowledge."

If Taylor is right - and he has the background to be taken very seriously - solid wood producers should expect another survival year in 09, some stability in 2010, and then finally a return to good business starting in 2011. "We are looking for a breakout year in terms of strong prices due to a shortage of supply in 2011 (and most likely again in 2012)."

In that light, the latest stats from the US Commerce Department showing that housing starts fell another 4.5 percent in October to the lowest level since they started keeping records in 1959 (annual rate of 791,000) are neither surprising nor alarming.

Scott Jamieson, Editor  

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