Demand from China lifts Plum Creek
In its second quarter, timber company Plum Creek's shipments of Oregon sawlogs to China went up 7%, compared with the first quarter. China now accounts for 27% of such logs, and Plum Creek CEO Rick Holley sees this relationship as a new status quo.
"While we expect that Chinese demand will exhibit some volatility from time to time, we believe their presence in the North American market is a lasting one that adds a relevant source of demand to West Coast log and lumber markets," Holley told investors.
He added that the combination of offshore demand and reductions in future Canadian supply are going to have a big impact on the trade balance, "which is positive for Plum Creek."
Back here in the United States, Holley described demand rising slowly, despite a housing recovery that has been "much more anemic than anyone anticipated."
Reaching 600,000 housing starts in 2011 is questionable, he said, but housing starts in the 700,000 to 750,000 range is likely for 2012. While much depends on the actions of lawmakers in Washington, D.C., he added: "Clearly, it will be better next year than this year," Holley said.
The Seattle-based company reported earnings of $44 million in the second quarter, up from $35 million in the same quarter last year. Sales increased to $284 million, up from $258 million.