Forum Archive Index - August 2000

[Chris <cd@ak.planet.gen.nz>]

But why?  We're not talking Xmas trees here are we Mike? 

My view.  World lumber prices are not gaining as quickly as expected 
despite record housing starts in the US and increased demand out of north 
Asia.  The big worldwide players in the lumber/forestry market are nearly 
all suffering from depressed share prices and have plenty of opportunity 
to rationalise forestry assets closer to their markets.  Why horse around 
with shitty Pinus Radiata, still considered only appropriate as dunnage 
timber in most of Asia. Being located at the bottom of the world does not 
help either.  Think how much the oil lift has added to shipping charges 
too.

Then we look locally and see weak demand from a struggling housing sector 
and only average demand from the commercial sector.  Hey look at the 
figures, last months housing starts reached a 12 yr low.  House sale 
numbers are equally dismal, interest rates are still high, immigration is 
negative so what in god's name is going drive the market and lift FFS?

Okay the currency will help but be assured hedging will swallow early 
gains.  So what's left?
Someone, a couple of weeks ago, suggested the US forest fires would spur 
demand but no commercial forests were affected.  So we are still on home 
base and it's looking lonely for FFS.  

A white night investor is unlikely to pluck FFS at 120-150c.  Forget it, 
recapitalisation is on the way.  It has been signalled by the company and 
now by industry. 

Just my uninformed opinion,

Chris

>Between now and December they will appear a steal at these prices.
>
>MN

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